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Government Outlays, Economic Growth and Unemployment: A VAR Model

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Author Info
Burton A. Abrams () (Department of Economics,University of Delaware)
Siyan Wang () (Department of Economics,University of Delaware)

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Abstract

This paper examines the dynamic effects of government outlays on economic growth and the unemployment rate in the context of vector autoregression. We utilize data from 20 OECD countries over three recent decades. Our main conclusions are: (1) positive shocks to government outlays will slow down economic growth and raise the unemployment rate; (2) different types of government outlays have different effects on growth and unemployment, with transfers and subsidies having a larger effect than government purchases; (3) causality runs one-way from government outlays to economic growth and the unemployment rate; (4) the above results are not sensitive to how government outlays are financed.

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File URL: http://www.lerner.udel.edu/economics/WorkingPapers/2007/UDWP2007-13.pdf
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Publisher Info
Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 07-13.

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Length: 25 pages
Date of creation: Jul 2007
Date of revision:
Handle: RePEc:dlw:wpaper:07-13.

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Related research
Keywords: government outlays; economic growth; unemployment rate; vector autoregression; Granger causality;

Find related papers by JEL classification:
C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Hypothesis Testing
C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions
H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Burton A. Abrams & Siyan Wang, 2007. "The Effect of Government Size on the Steady-State Unemployment Rate: An Error Correction Model," Working Papers 07-14, University of Delaware, Department of Economics. [Downloadable!]
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This page was last updated on 2009-11-27.

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