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Too much public expenditures, less economic growt

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  • Itchoko motande Mondjeli mwa ndjokou

    (CEREG, University of Yaoundé II- Soa)

Abstract

This paper studies the existence, for West Africa Economic and Monetary Union (WAEMU)'s countries, of a public expenditures threshold above which its effect on economic growth is negative. We estimate also the effect on growth from the control variables that are standard in growth model. Therefore, we use panel data over the period 1985-2012. Relying upon the estimation of Panel Smooth Transition Regression (PSTR) model inspired from González et al. (2005), our main findings are the following. (i) The estimated threshold for the public expenditures is 15.41%. (ii) Before the threshold, public expenditure has no significant effect on economic growth. (iii) On the other side of the threshold, a fiscal policy expansion may be detrimental for growth.

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  • Itchoko motande Mondjeli mwa ndjokou, 2015. "Too much public expenditures, less economic growt," Economics Bulletin, AccessEcon, vol. 35(3), pages 1985-1991.
    • Handle: RePEc:ebl:ecbull:eb-15-00261
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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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