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The Composition of Public Expenditure, Physical Infrastructure and Economic Growth in Nepal

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  • Prakash Kumar Shrestha

    () (Nepal Rastra Bank)

Abstract

This paper investigates the role of composition of public expenditure, particularly the expenditure on physical infrastructure, on economic growth in Nepal from the time series perspective based on the endogenous growth model. The impact of public expenditure on economic growth has been found to be positive. Hence, low economic growth in Nepal in recent years can be attributed to low government expenditure on infrastructure. Availability of infrastructure situation is very dismal. Given the sustainable debt scenario, Nepal can go for more investment in infrastructure by external borrowing at least for the medium term.

Suggested Citation

  • Prakash Kumar Shrestha, 2009. "The Composition of Public Expenditure, Physical Infrastructure and Economic Growth in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 21, pages 1-4, April.
  • Handle: RePEc:nrb:journl:v:21:y:2009:p:4
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    References listed on IDEAS

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    1. Henning Bohn, 1998. "The Behavior of U. S. Public Debt and Deficits," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 949-963.
    2. Glomm, Gerhard & Ravikumar, B., 1997. "Productive government expenditures and long-run growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 183-204, January.
    3. 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.
    4. Semmler, Willi & Greiner, Alfred & Diallo, Bobo & Rezai, Armon & Rajaram, Anand, 2007. "Fiscal policy, public expenditure composition, and growth theory and empirics," Policy Research Working Paper Series 4405, The World Bank.
    5. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    6. Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996. "The composition of public expenditure and economic growth," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 313-344, April.
    7. Blanca Sanchez-Robles, 1998. "Infrastructure Investment And Growth: Some Empirical Evidence," Contemporary Economic Policy, Western Economic Association International, vol. 16(1), pages 98-108, January.
    8. Aschauer, David Alan, 1989. "Does public capital crowd out private capital?," Journal of Monetary Economics, Elsevier, vol. 24(2), pages 171-188, September.
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