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Government Spending and Inclusive Growth in Developing Asia

Author

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  • Hur, Seok-Kyun

    (Chung-Ang University)

Abstract

This paper assesses the effects of fiscal policy on both equity and growth, specifically whether it is possible to design fiscal spending so that it enhances equity without sacrificing economic growth and vice versa. A cross-country panel vector autoregression (PVAR) using the World Development Indicators confirms the growth effects of individual fiscal spending items as anticipated whereas distributional effects were either temporarily positive or negligible for most fiscal items. However, compared with Organisation for Economic Co-operation and Development members, spending on public health and public education appeared to alleviate income inequality significantly in the Asian Development Bank members. This implies that fiscal expenditure policies may contribute more to inclusive growth in developing economies than in advanced ones.

Suggested Citation

  • Hur, Seok-Kyun, 2014. "Government Spending and Inclusive Growth in Developing Asia," ADB Economics Working Paper Series 415, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0415
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    References listed on IDEAS

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    5. Takatoshi Ito & Andrew K. Rose, 2007. "Fiscal Policy and Management in East Asia," NBER Books, National Bureau of Economic Research, Inc, number ito_07-1, March.
    6. 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.
    7. Love, Inessa & Zicchino, Lea, 2006. "Financial development and dynamic investment behavior: Evidence from panel VAR," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(2), pages 190-210, May.
    8. Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
    9. Seok-Kyun Hur, 2007. "Measuring the Effectiveness of Fiscal Policy in Korea," NBER Chapters, in: Fiscal Policy and Management in East Asia, pages 63-93, National Bureau of Economic Research, Inc.
    10. World Bank, 2013. "World Development Indicators 2013," World Bank Publications - Books, The World Bank Group, number 13191, December.
    11. Rauniyar, Ganesh P. & Kanbur, Ravi, 2010. "Inclusive Development: Two Papers on Conceptualization, Application, and the ADB Perspective," Working Papers 57036, Cornell University, Department of Applied Economics and Management.
    12. Rafael Ranieri & Raquel Almeida Ramos, 2013. "Inclusive Growth: Building up a Concept," Working Papers 104, International Policy Centre for Inclusive Growth.
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    Citations

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    Cited by:

    1. Yaru, M.A. & Mobolaji, H.I. & Kilishi, A. A. & Yakubu, A.T., 2018. "Public Expenditure And Inclusive Growth In Nigeria," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 5(5), pages 46-61, June.
    2. Mohamed Traoré, 2018. "Government spending and inclusive growth in sub-Saharan Africa: A panel VAR analysis," CERDI Working papers hal-01940506, HAL.
    3. Jeffrey Kouton, 2021. "The impact of renewable energy consumption on inclusive growth: panel data analysis in 44 African countries," Economic Change and Restructuring, Springer, vol. 54(1), pages 145-170, February.
    4. Doukouré Charles Fe & Jeffrey Kouton, 2023. "The Banking Sector, the Engine of Inclusive Growth in WAEMU Countries: Decoy or Glimmer?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 472-502, March.
    5. Michael Shashoua & Sudip Ranjan Basu, 2015. "Polarizing World: GDP, Development and Beyond," MPDD Working Paper Series WP/15/13, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    6. Hasnul, Al Gifari, 2015. "The effects of government expenditure on economic growth: the case of Malaysia," MPRA Paper 71254, University Library of Munich, Germany.
    7. Mohamed Traoré, 2018. "Government spending and inclusive growth in sub-Saharan Africa: A panel VAR analysis," Working Papers hal-01940506, HAL.
    8. Jeffrey Kouton, 2019. "Relationship between economic freedom and inclusive growth: a dynamic panel analysis for sub-Saharan African countries," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 21(1), pages 143-165, June.

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    More about this item

    Keywords

    Gini coefficient; government spending; inclusive growth; Panel Vector Autoregression;
    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
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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