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Does Infrastructure Matters in Government Spending? A Case Study of Jammu and Kashmir (India) with Cointegration Approach

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  • Samir Ul Hassan
  • Biswambhara Mishra

Abstract

This study is an attempt to investigate the impact of infrastructure level on government spending in short and long run and also to find the tendency of infrastructure level to stabilise any disequilibrium in government spending in long run. Infrastructure is related to the quality and quantity of goods and services provided by government to the population, to fulfil their diverse demands. The state of Jammu and Kashmir (J&K) is not an exception; the increasing trend in different aspects of population and rising needs and aspirations of the growing population forces the government to increase expenditure on that count, which results in increase in aggregate government spending. Using multivariate cointegration technique followed by vector error correction model (VECM) model on annual time-series data for the period from 1984 to 2013 with broader data set of infrastructure dimension, the study found that the infrastructure variables cause major variation in government expenditure in short as well as in long run. Study shows that infrastructure related to health, education, roads and portable water produce positive and significant impact on the growth of government spending and infrastructure related to these dimensions has significant tendency to stabilise any disequilibrium in government spending in long run. JEL Classification: H3, H5, H53, I

Suggested Citation

  • Samir Ul Hassan & Biswambhara Mishra, 2017. "Does Infrastructure Matters in Government Spending? A Case Study of Jammu and Kashmir (India) with Cointegration Approach," Journal of Infrastructure Development, India Development Foundation, vol. 9(2), pages 82-97, December.
    • Handle: RePEc:sae:jouinf:v:9:y:2017:i:2:p:82-97
    DOI: 10.1177/0974930617732241
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    References listed on IDEAS

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    More about this item

    Keywords

    Health; education; infrastructure; government expenditure; cointegration;
    All these keywords.

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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