IDEAS home Printed from https://ideas.repec.org/a/ist/iujepr/v9y2022i2p293-314.html
   My bibliography  Save this article

Public Expenditures, Economic Growth and Income Inequality: Empirical Evidence from the Commonwealth of Independent States

Author

Listed:
  • Mursit Recepoglu

    (Gümüşhane University, Vocational School of Social Sciences, Accounting and Tax Department Gümüşhane, Turkiye)

Abstract

This study has examined the causality relationship between public expenditures, economic growth and income inequality for transition economies called the Commonwealth of Independent States (CIS). In the study, in which the 1998-2019 period was analyzed, the effects of public expenditures on economic growth and income inequality were determined with the bootstrap panel causality test. Bootstrap panel causality test results show that there is a one-way causality relationship from public expenditures to economic growth for Armenia, Belarus, and Kazakhstan. On the other hand, a one-way causality relationship has been determined from public expenditures to income inequality in Belarus and Kazakhstan, and from income inequality to public expenditures in Kyrgyzstan. In Moldova and Russia, however, no causal relationship could be obtained between the variables. The overall evaluation of the findings obtained from the panel causality tests concluded that public expenditures in CIS member countries are closely related to both economic growth and income inequality. CIS member countries need state interventions in order for the market system to fully settle in transition period. However, implementing policies that do not exclude private investments and do not harm the functioning of the market economy should be elaborated during practicing public expenditure policies in these countries in transition.

Suggested Citation

  • Mursit Recepoglu, 2022. "Public Expenditures, Economic Growth and Income Inequality: Empirical Evidence from the Commonwealth of Independent States," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 9(2), pages 293-314, July.
    • Handle: RePEc:ist:iujepr:v:9:y:2022:i:2:p:293-314
    DOI: 10.26650/JEPR1103290
    as

    Download full text from publisher

    File URL: https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/B0B5EBFEC06343D2912B88678D26F111
    Download Restriction: no
    File URL: https://iupress.istanbul.edu.tr/en/journal/jepr/article/public-expenditures-economic-growth-and-income-inequality-empirical-evidence-from-the-commonwealth-of-independent-states
    Download Restriction: no
    File URL: https://libkey.io/10.26650/JEPR1103290?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jaejoon Woo & Ms. Elva Bova & Mr. Tidiane Kinda & Ms. Yuanyan S Zhang, 2013. "Distributional Consequences of Fiscal Consolidation and the Role of Fiscal Policy: What Do the Data Say?," IMF Working Papers 2013/195, International Monetary Fund.
    2. A. F. Al-Faris, 2002. "Public expenditure and economic growth in the Gulf Cooperation Council countries," Applied Economics, Taylor & Francis Journals, vol. 34(9), pages 1187-1193.
    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. Juin-Jen Chang & Jang-Ting Guo & Wei-Neng Wang, 2021. "On Government Spending and Income Inequality under Monopolistic Competition," Working Papers 202103, University of California at Riverside, Department of Economics.
    5. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    6. Edward Anderson & Maria Ana Jalles D'Orey & Maren Duvendack & Lucio Esposito, 2017. "Does Government Spending Affect Income Inequality? A Meta-Regression Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 961-987, September.
    7. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    8. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    9. Monica Ospina, 2009. "The effect of social spending on income inequality:An analysis for Latin American countries," Documentos de Trabajo de Valor Público 10620, Universidad EAFIT.
    10. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    11. Yobouet Thierry Bienvenu Gnangoin & Liangsheng Du & GuyRoland Assamoi & Akadje JeanRoland Edjoukou & Diby François Kassi, 2019. "Public Spending, Income Inequality and Economic Growth in Asian Countries: A Panel GMM Approach," Economies, MDPI, vol. 7(4), pages 1-15, November.
    12. Mario Holzner, 2010. "Inequality, Growth and Public Spending in Central, East and Southeast Europe," wiiw Working Papers 71, The Vienna Institute for International Economic Studies, wiiw.
    13. António Afonso & Ludger Schuknecht & Vito Tanzi, 2010. "Income distribution determinants and public spending efficiency," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(3), pages 367-389, September.
    14. Roine, Jesper & Vlachos, Jonas & Waldenström, Daniel, 2009. "The long-run determinants of inequality: What can we learn from top income data?," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 974-988, August.
    15. Muthi Samudram & Mahendhiran Nair & Santha Vaithilingam, 2009. "Keynes and Wagner on government expenditures and economic development: the case of a developing economy," Empirical Economics, Springer, vol. 36(3), pages 713-713, June.
    16. Henryk Gurgul & Łukasz Lach & Roland Mestel, 2012. "The relationship between budgetary expenditure and economic growth in Poland," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 20(1), pages 161-182, March.
    17. Sunday Osaretin Iyare & Troy Lorde, 2004. "Co-integration, causality and Wagner's law: tests for selected Caribbean countries," Applied Economics Letters, Taylor & Francis Journals, vol. 11(13), pages 815-825.
    18. Saten Kumar & Don J. Webber & Scott Fargher, 2012. "Wagner's Law revisited: cointegration and causality tests for New Zealand," Applied Economics, Taylor & Francis Journals, vol. 44(5), pages 607-616, February.
    19. Muthi Samudram & Mahendhiran Nair & Santha Vaithilingam, 2009. "Keynes and Wagner on government expenditures and economic development: the case of a developing economy," Empirical Economics, Springer, vol. 36(3), pages 697-712, June.
    20. Pintu Parui, 2021. "Government expenditure and economic growth: a post-Keynesian analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 35(3-4), pages 597-625, July.
    21. Michael Bleaney & Norman Gemmell & Richard Kneller, 2001. "Testing the endogenous growth model: public expenditure, taxation, and growth over the long run," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(1), pages 36-57, February.
    22. Gábor Kutasi & Ádám Marton, 2020. "The long-term impact of public expenditures on GDP-growth," Society and Economy, Akadémiai Kiadó, Hungary, vol. 42(4), pages 403-419, December.
    23. Leah Boustan & Fernando Ferreira & Hernan Winkler & Eric M. Zolt, 2013. "The Effect of Rising Income Inequality on Taxation and Public Expenditures: Evidence from U.S. Municipalities and School Districts, 1970–2000," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1291-1302, October.
    24. Wu, Shih-Ying & Tang, Jenn-Hong & Lin, Eric S., 2010. "The impact of government expenditure on economic growth: How sensitive to the level of development?," Journal of Policy Modeling, Elsevier, vol. 32(6), pages 804-817, November.
    25. Magazzino, Cosimo, 2012. "Wagner versus Keynes: Public spending and national income in Italy," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 890-905.
    26. Djeneba Doumbia & Mr. Tidiane Kinda, 2019. "Reallocating Public Spending to Reduce Income Inequality: Can It Work?," IMF Working Papers 2019/188, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Selim Demez, 2021. "Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 8(2), pages 199-210, July.
    2. 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.
    3. Sheilla Nyasha & Nicholas M. Odhiambo, 2019. "Government Size and Economic Growth: A Review of International Literature," SAGE Open, , vol. 9(3), pages 21582440198, September.
    4. Selçuk Çağrı ESENER & Evren İPEK, 2018. "The Impacts of Public Expenditure, Government Stability and Corruption on Per Capita Growth: An Empirical Investigation on Developing Countries," Sosyoekonomi Journal, Sosyoekonomi Society, issue 26(36).
    5. Ali, Wajid & Munir, Kashif, 2016. "Testing Wagner versus Keynesian Hypothesis for Pakistan: The Role of Aggregate and Disaggregate Expenditure," MPRA Paper 74570, University Library of Munich, Germany.
    6. Amit Nandan & Hrushikesh Mallick, 2022. "Do growth-promoting factors induce income inequality in a transitioning large developing economy? An empirical evidence from Indian states," Economic Change and Restructuring, Springer, vol. 55(2), pages 1109-1139, May.
    7. Durusu-Ciftci, Dilek & Gokmenoglu, Korhan K. & Yetkiner, Hakan, 2018. "The heterogeneous impact of taxation on economic development: New insights from a panel cointegration approach," Economic Systems, Elsevier, vol. 42(3), pages 503-513.
    8. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    9. Suzana Balaban & Dejan Živkov, 2021. "Validity of Wagner’s Law in Transition Economies: A Multivariate Approach," Hacienda Pública Española / Review of Public Economics, IEF, vol. 236(1), pages 105-131, March.
    10. 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.
    11. Kashif MUNIR & Wajid ALI, 2019. "Wagner versus Keynesian Hypothesis: Role of aggregate and disaggregate expenditure in Pakistan," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(621), W), pages 181-200, Winter.
    12. repec:agr:journl:v:4(621):y:2019:i:4(621):p:181-200 is not listed on IDEAS
    13. Deepti Ahuja & Deepak Pandit, 2020. "Public Expenditure and Economic Growth: Evidence from the Developing Countries," FIIB Business Review, , vol. 9(3), pages 228-236, September.
    14. Andrés Rodríguez-Pose & Yannis Psycharis & Vassilis Tselios, 2012. "Public investment and regional growth and convergence: Evidence from Greece," Papers in Regional Science, Wiley Blackwell, vol. 91(3), pages 543-568, August.
    15. V. Chandran Govindaraju & Ramesh Rao & Sajid Anwar, 2011. "Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views," Economic Change and Restructuring, Springer, vol. 44(3), pages 203-219, August.
    16. Irandoust, Manuchehr, 2019. "Wagner on government spending and national income: A new look at an old relationship," Journal of Policy Modeling, Elsevier, vol. 41(4), pages 636-646.
    17. Themba G Chirwa & NM Odhiambo, 2019. "An Empirical Test Of Exogenous Growth Models: Evidence From Three Southern African Countries," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 64(220), pages 7-38, January –.
    18. Nicholas Odhiambo, 2015. "Government Expenditure and Economic Growth in South Africa: an Empirical Investigation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(3), pages 393-406, September.
    19. Mohammed Daher Alshammary & Norlin Khalid & Zulkefly Abdul Karim & Riayati Ahmad, 2022. "Government expenditures and economic growth in the MENA region: A dynamic heterogeneous panel estimation," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 3287-3299, July.
    20. Dimitrios Paparas & Christian Richter, 2015. "Fiscal policy and economic growth: Empirical evidence from the European Union," Working Papers 2015.06, International Network for Economic Research - INFER.
    21. Cosimo Magazzino, 2012. "The Nexus between Disaggregated Public Spending and GDP in the Euro Area," Economics Bulletin, AccessEcon, vol. 32(3), pages 2560-2579.

    More about this item

    Keywords

    Public expenditures; economic growth; income inequality; fiscal policy; panel causality analysis JEL Classification : H50 ; E62 ; O40;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ist:iujepr:v:9:y:2022:i:2:p:293-314. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ertugrul YASAR (email available below). General contact details of provider: https://edirc.repec.org/data/ifisttr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.