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Government Expenditures and Economic Growth: A Cointegration Analysis for Thailand under the Floating Exchange Rate Regime

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  • Jiranyakul, Komain

Abstract

Contributing to the controversial issue of the impact of government spending on economic growth, this paper shows that government spending has a long-run impact in stimulating aggregate output in Thailand during the floating exchange rate regime. The results reveal that the long-run relationship between aggregate output, government expenditures, and private consumption is stable. Based on the quarterly dataset from1997Q3 to 2019Q4, the results suggest that expansionary fiscal policy is effective under the floating exchange rate regime. Furthermore, the traditional version of Wagner’s law is supported since an expansion in aggregate output causes government expenditure to increase. Therefore, the findings in this paper support both the Keynesian hypothesis and Wagner’s law.

Suggested Citation

  • Jiranyakul, Komain, 2020. "Government Expenditures and Economic Growth: A Cointegration Analysis for Thailand under the Floating Exchange Rate Regime," MPRA Paper 109585, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:109585
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    References listed on IDEAS

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    More about this item

    Keywords

    Government expenditures; real GDP; cointegration; causality;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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