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Public expenditure and optimal size of state In Cameroon from 1982 To 2023: the Armey Curve

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  • NLOGA ETOUNDI, Joseph

Abstract

The objective of this article is to determine the optimal threshold of public expenditure or optimal size of the State, necessary for economic growth in Cameroon over the period 1982 to 2023. The hypotheses on the conditionality of the optimal allocation of said expenditure at a threshold, and on the presence of a non-linear relationship between the macroeconomic variables of the study, were issued. It is indeed a quadratic relationship whose estimation is based on the calculation of a critical threshold, and the analysis in this case leads on using the method of Vedder and Gallaway (1998), also known as the Armey curve. Its main result is that total public expenditure in Cameroon since 2008 is above the optimal threshold of 16% of GDP, for which the effects would be beneficial on growth. The study recommends reducing public expenditure in non-growth sectors and channeling it to infrastructure investments capable of inducing private investment.

Suggested Citation

  • NLOGA ETOUNDI, Joseph, 2024. "Public expenditure and optimal size of state In Cameroon from 1982 To 2023: the Armey Curve," MPRA Paper 122148, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:122148
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    References listed on IDEAS

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    1. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    2. Mihai MutaÅŸcu & Marius MiloÅŸ, 2009. "Optimal Size Of Government Spending. The Case Of European Union Member States," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(11), pages 1-45.
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    Keywords

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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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