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Government Outlays, Economic Growth and Unemployment: A VAR Model

  • Burton A. Abrams

    ()

    (Department of Economics,University of Delaware)

  • Siyan Wang

    ()

    (Department of Economics,University of Delaware)

This paper examines the dynamic effects of government outlays on economic growth and the unemployment rate in the context of vector autoregression. We utilize data from 20 OECD countries over three recent decades. Our main conclusions are: (1) positive shocks to government outlays will slow down economic growth and raise the unemployment rate; (2) different types of government outlays have different effects on growth and unemployment, with transfers and subsidies having a larger effect than government purchases; (3) causality runs one-way from government outlays to economic growth and the unemployment rate; (4) the above results are not sensitive to how government outlays are financed.

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File URL: http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2007/UDWP2007-13.pdf
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Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 07-13.

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Length: 25 pages
Date of creation: Jul 2007
Date of revision:
Handle: RePEc:dlw:wpaper:07-13.
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Web page: http://www.lerner.udel.edu/departments/economics/department-economics/
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