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Public Expenditure and Economic Growth in Togo

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  • Koffi Yovo

    (University of Lomé, Togo)

Abstract

This paper assesses the impact of the level and composition of public expenditure on growth in Togo. To this end, a neoclassical growth model was estimated using the Two-Stage Least-Squares method.The findings highlight that public expenditure during the period 1980–2009 had no significant positive effect on economic growth. However, public consumption had a negative impact and public investment a positive impact on growth. The maximum level at which public consumption becomes harmful to economic growth is estimated at 16%. Similarly, the minimum level of investment required to boost growth is estimated at 5.7%. All things being equal, a reallocation of public expenditure following the estimated optimal composition involves an additional increase in growth of 24%. Moreover, the study finds that increasing public expenditure involves a crowding-out effect, suggesting the need to review the way in which public expenditure can be financed more efficiently

Suggested Citation

  • Koffi Yovo, 2017. "Public Expenditure and Economic Growth in Togo," Working Papers 331, African Economic Research Consortium, Research Department.
    • Handle: RePEc:aer:wpaper:331
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    References listed on IDEAS

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    Cited by:

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    2. Guilherme Correa Petry & Ely José Mattos, 2023. "The Effects of Public Expenditure on Municipal Development: A Dynamic Panel Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 165(2), pages 695-714, January.

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