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The Demand for Current Public Expenditure in Fiji: Theory and Empirical Results

  • Doessel, Darrel
  • Valadkhani, Abbas

This paper analyses current government expenditure in Fiji using annual time series data for the period 1969-1999. Alternative theories of government expenditure are reviewed and a distinction is made between economic/apolitical determinants and institutional/political determinants. Categorising the literature in this way suggests the application of non-nested tests in empirical work, which is reported elsewhere. All non-nested tests lead to the conclusion of double rejection. Therefore, a parsimonious comprehensive model, encompassing both economic and institutional variables, is preferred as it passes all diagnostic tests and exhibits no sign of misspecification. The Engle-Granger two-step procedure has been applied to analyse both long- and short-run determinants of public expenditure. The paper presents the first empirical estimates of the own-price elasticity of demand and income elasticity of demand for current public expenditure in Fiji.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50392.

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Date of creation: 2003
Date of revision:
Publication status: Published in Pacific Economic Bulletin 1.18(2003): pp. 54-66
Handle: RePEc:pra:mprapa:50392
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  1. Abbas Valadkhani, 1998. "Effect of government capital expenditure on GDP in the Iranian economy using superexogeneity testing," Applied Economics Letters, Taylor & Francis Journals, vol. 5(6), pages 361-364.
  2. Pesaran, H., 1995. "Planning and Macroeconomic Stabilization in Iran," Cambridge Working Papers in Economics 9508, Faculty of Economics, University of Cambridge.
  3. Azmat Gani, 1998. "Some empirical evidence on the determinants of immigration from Fiji to New Zealand: 1970-94," New Zealand Economic Papers, Taylor & Francis Journals, vol. 32(1), pages 57-69.
  4. Buchanan, James M. & Wagner, Richard E., 1978. "Dialogues concerning fiscal religion," Journal of Monetary Economics, Elsevier, vol. 4(3), pages 627-636, August.
  5. D.P. Doessel & Abbas Valadkhani, 2002. "Public Finance and The Size of Government: A Literature Review and Econometric Results for Fiji," School of Economics and Finance Discussion Papers and Working Papers Series 108, School of Economics and Finance, Queensland University of Technology.
  6. Marlow, Michael L & Orzechowski, William, 1996. " Public Sector Unions and Public Spending," Public Choice, Springer, vol. 89(1-2), pages 1-16, October.
  7. Gemmell, Norman, 1990. "Wagner's Law, Relative Prices and the Size of the Public Sector," The Manchester School of Economic & Social Studies, University of Manchester, vol. 58(4), pages 361-77, December.
  8. Kenneth Rogoff, 1987. "Equilibrium Political Budget Cycles," NBER Working Papers 2428, National Bureau of Economic Research, Inc.
  9. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
  10. Borcherding, Thomas E., 1985. "The causes of government expenditure growth: A survey of the U.S. evidence," Journal of Public Economics, Elsevier, vol. 28(3), pages 359-382, December.
  11. Dennis Mueller & Peter Murrell, 1986. "Interest groups and the size of government," Public Choice, Springer, vol. 48(2), pages 125-145, January.
  12. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
  13. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
  14. Valadkhani, Abbas, 2001. "An Analysis of Iran’s Third Five-Year Development Plan in the Post-Revolution Era (2000-2005)," MPRA Paper 50386, University Library of Munich, Germany.
  15. repec:oup:restud:v:42:y:1975:i:2:p:169-90 is not listed on IDEAS
  16. Wagner, Richard E & Weber, Warren E, 1975. "Competition, Monopoly, and the Organization of Government in Metropolitan Areas," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 661-84, December.
  17. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-96, June.
  18. Pesaran, M H & Deaton, Angus S, 1978. "Testing Non-Nested Nonlinear Regression Models," Econometrica, Econometric Society, vol. 46(3), pages 677-94, May.
  19. Stigler, George J, 1970. "Director's Law of Public Income Redistribution," Journal of Law and Economics, University of Chicago Press, vol. 13(1), pages 1-10, April.
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