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Government spending and economic growth in SAARC: evidence from panel cointegration

Author

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  • Rudra P. Pradhan

Abstract

The study examines the nexus between government spending and economic growth in the seven SAARC countries, namely Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, for the period 1970-2007. Using panel cointegration and panel causality, the paper finds that government spending and economic growth is cointegrated, indicating the existence of long run equilibrium relationship between them. It also confirms the presence of bidirectional causality between government spending and economic growth, both in the short run and long run, except Pakistan and Sri Lanka. The implication of this paper is that increased government spending is both cause and consequence of increased economic growth.

Suggested Citation

  • Rudra P. Pradhan, 2011. "Government spending and economic growth in SAARC: evidence from panel cointegration," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 4(1), pages 78-94.
    • Handle: RePEc:ids:ijepee:v:4:y:2011:i:1:p:78-94
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    Cited by:

    1. Arvin, Mak B. & Pradhan, Rudra P. & Nair, Mahendhiran S., 2021. "Are there links between institutional quality, government expenditure, tax revenue and economic growth? Evidence from low-income and lower middle-income countries," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 468-489.
    2. Alam, Arif & Malik, Ihtisham Abdul & Abdullah, Alias Bin & Hassan, Asmadi & Faridullah, & Awan, Usama & Ali, Ghulam & Zaman, Khalid & Naseem, Imran, 2015. "Does financial development contribute to SAARC׳S energy demand? From energy crisis to energy reforms," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 818-829.

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