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Government Spending, Trade Openness and Economic Growth in India: A Time Series Analysis

  • Hrushikesh Mallick


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    The study examines the impact of aggregate government expenditure and its two broader components such as revenue expenditure and capital expenditure on the growth rate of output in the Indian context along with other key potential determinants of economic growth such as trade openness and private investment. It utilizes structural vector autoregression (SVAR) methodology for examining the dynamic response of output growth to the shocks in major macro economic variables wherein public expenditure is considered to be an important fiscal policy instrument. [WP No. 403].

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    Paper provided by eSocialSciences in its series Working Papers with number id:1809.

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    Date of creation: Dec 2008
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    Handle: RePEc:ess:wpaper:id:1809
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    1. Fölster, Stefan & Henrekson, Magnus, 1997. "Growth and the Public Sector: A Critique of the Critics," Working Paper Series 492, Research Institute of Industrial Economics, revised 10 Jun 1998.
    2. Ram, Rati, 1986. "Government Size and Economic Growth: A New Framework and Some Evidencefrom Cross-Section and Time-Series Data," American Economic Review, American Economic Association, vol. 76(1), pages 191-203, March.
    3. Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
    4. Fölster, Stefan & Henrekson, Magnus, 2000. "Growth Effects of Government Expenditure and Taxation in Rich Countries," SSE/EFI Working Paper Series in Economics and Finance 391, Stockholm School of Economics.
    5. Henning, John A & Tussing, A Dale, 1974. "Income Elasticity of the Demand for Public Expenditures in the United States," Public Finance = Finances publiques, , vol. 29(3-4), pages 325-41.
    6. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 407-43, May.
    7. Paul Romer, 1990. "Are Nonconvexities Important For Understanding Growth?," NBER Working Papers 3271, National Bureau of Economic Research, Inc.
    8. Lin, Chi-Ang, 1995. "More Evidence on Wagner's Law for Mexico," Public Finance = Finances publiques, , vol. 50(2), pages 267-77.
    9. Agell, Jonas & Lindh, Thomas & Ohlsson, Henry, 1998. "Growth and the Public Sector: A reply," Working Paper Series 1999:1, Uppsala University, Department of Economics.
    10. Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
    11. Gokan, Yoichi, 2002. "Alternative government financing and stochastic endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(4), pages 681-706, April.
    12. Dani Rodrik, 1996. "Why Do More Open Economies Have Bigger Governments?," NBER Working Papers 5537, National Bureau of Economic Research, Inc.
    13. Nagarajan, P & Spears, A, 1990. "An Econometric Test of Wagner's Law for Mexico: A Re-examination," Public Finance = Finances publiques, , vol. 45(1), pages 165-68.
    14. Ashworth, John, 1994. "Spurious in Mexico: A Comment on Wagner's Law," Public Finance = Finances publiques, , vol. 49(2), pages 282-86.
    15. Nijkamp, Peter & Poot, Jacques, 2004. "Meta-analysis of the effect of fiscal policies on long-run growth," European Journal of Political Economy, Elsevier, vol. 20(1), pages 91-124, March.
    16. Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
    17. Sahni, Balbir S & Singh, Balvir, 1984. "On the Causal Directions between National Income and Government Expenditure in Canada," Public Finance = Finances publiques, , vol. 39(3), pages 359-93.
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