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Government size and economic growth in emerging market economies: a panel co-integration approach

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  • Arpita Ghose
  • Sutapa Das

Abstract

A significant positive influence of both government size and domestic investment on economic growth is found in the long run during 1970--2006 for a sample of 19 emerging market economies, employing panel co-integration testing and estimating the parameters using dynamic ordinary least square method, for all the indicators, excepting the case when one chooses general government final consumption expenditure as a percentage of GDP a measure of government size and gross capital formation as a percentage of GDP a measure of domestic investment, with per capita GDP a proxy for economic growth. The findings corroborate the argument that diverse results of the earlier studies are due to different measures adopted.

Suggested Citation

  • Arpita Ghose & Sutapa Das, 2013. "Government size and economic growth in emerging market economies: a panel co-integration approach," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 6(1), pages 14-38, March.
    • Handle: RePEc:taf:macfem:v:6:y:2013:i:1:p:14-38
    DOI: 10.1080/17520843.2012.697075
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    References listed on IDEAS

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    1. Christophe Hurlin, 2004. "Testing Granger causality in Heterogeneous panel data models with fixed coefficients," Post-Print halshs-00257395, HAL.
    2. Peter Pedroni & David Canning, 2004. "The Effect of Infrastructure on Long Run Economic Growth," Department of Economics Working Papers 2004-04, Department of Economics, Williams College.
    3. Newbery, David M G, 1990. "Tax Reform, Trade Liberalisation and Industrial Restructuring in Hungary," CEPR Discussion Papers 371, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Hajamini, Mehdi & Falahi, Mohammad Ali, 2018. "Economic growth and government size in developed European countries: A panel threshold approach," Economic Analysis and Policy, Elsevier, vol. 58(C), pages 1-13.
    2. Antonio Afonso & Hüseyin Sen & Ayse Kaya, 2021. "Government Size, Unemployment and Inflation Nexus in Eight Large Emerging Market Economies," Hacienda Pública Española / Review of Public Economics, IEF, vol. 235(1), pages 133-170, March.
    3. Philip Arestis & Hüseyin Şen & Ayşe Kaya, 2021. "On the linkage between government expenditure and output: empirics of the Keynesian view versus Wagner’s law," Economic Change and Restructuring, Springer, vol. 54(2), pages 265-303, May.
    4. Hüseyin Şen & Ayşe Kaya & Ayşegül Durucan, 2023. "New insights into the growth-maximizing size of government: evidence and implications for Turkey," Economic Change and Restructuring, Springer, vol. 56(4), pages 2243-2296, August.
    5. Trofimov, Ivan D., 2020. "The optimum size of public education spending: panel data evidence," MPRA Paper 106847, University Library of Munich, Germany.
    6. Mehdi Hajamini & Mohammad Ali Falahi, 2014. "The nonlinear impact of government consumption expenditure on economic growth: Evidence from low and low-middle income countries," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-15, December.

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