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The Nexus Between Public Expenditure And Inflation In The Mediterranean Countries

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  • Cosimo MAGAZZINO

    (Roma Tre University, Italy)

Abstract

The aim of this article is to assess the empirical evidence of the nexus between public expenditure and inflation for the Mediterranean countries during the period 1970-2009, using a time-series approach. After a brief introduction, a concise survey of the economic literature on this issue is shown, before discussing the data and introducing some econometric techniques. Stationarity tests reveal, generally, that public expenditure/GDP ratio is a I(1) process, while prices index is a I(2) process. Moreover, a long-run relationship between the share of public expenditure and inflation is found for Cyprus, France, Greece and Portugal. Furthermore, Granger causality tests results show a short-run evidence of a directional flow from inflation to expenditure for Cyprus, France and Spain; and of a bidirectional flow for Italy, Malta and Portugal. Some notes on the policy implications of our empirical results conclude the paper.

Suggested Citation

  • Cosimo MAGAZZINO, 2011. "The Nexus Between Public Expenditure And Inflation In The Mediterranean Countries," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 2(1), pages 89-101.
    • Handle: RePEc:srs:jtpref:v:2:y:2011:i:1:p:89-101
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    Cited by:

    1. Joseph I. Amuka & Miracle O. Ezeoke & Fredrick O. Asogwa, 2016. "Government Spending Pattern and Macroeconomic Stability: A Vector Autoregressive Model," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1930-1936.
    2. Kais Saidi & Mohammad Mafizur Rahman, 2021. "The link between environmental quality, economic growth, and energy use: new evidence from five OPEC countries," Environment Systems and Decisions, Springer, vol. 41(1), pages 3-20, March.
    3. Mehrara , Mohsen & Behzadi Soufiani , Mohsen, 2015. "The Threshold Impact of Fiscal and Monetary Policies on Inflation: Threshold Model Approach," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 10(4), pages 1-27, October.
    4. Samer Mehibel & Yacine Belarbi, 2018. "Inflation Dynamics in Algeria," Journal of Economics and Behavioral Studies, AMH International, vol. 9(6), pages 174-187.
    5. Tai Dang Nguyen, 2016. "Impact Of Government Spending On Inflation In Asian Emerging Economies: Evidence From India, China, And Indonesia," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(05), pages 1171-1200, December.

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