Government Consumption, Government Debt and Economic Growth

Review of Development Economics, Forthcoming

26 Pages Posted: 14 Aug 2016 Last revised: 23 Feb 2020

See all articles by Shahrzad Ghourchian

Shahrzad Ghourchian

Siena College

Hakan Yilmazkuday

Florida International University (FIU) - Department of Economics

Date Written: February 21, 2020

Abstract

This paper compares the effects of government consumption and government debt on economic growth by using data from 83 countries, including both developed and developing markets, over the period between 1960 and 2014. Linear regressions reveal that the negative effects of government consumption are relatively higher than the negative effects of government debt. A nonlinear investigation further suggests that the restrictions on government expenditure to prevent negative growth are shown to be more important for countries with lower trade openness, lower inflation, or higher financial depth, whereas the restrictions on government debt are shown to be more important for countries with higher trade openness, lower inflation or higher financial depth.

Keywords: Government Consumption; Government Debt; Economic Growth; Thresholds; Cross-Country Analysis

JEL Classification: H50, H63, O23, O47

Suggested Citation

Ghourchian, Shahrzad and Yilmazkuday, Hakan, Government Consumption, Government Debt and Economic Growth (February 21, 2020). Review of Development Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2822396 or http://dx.doi.org/10.2139/ssrn.2822396

Shahrzad Ghourchian

Siena College ( email )

Siena Hall 301
515 Loudon Road
Loudonville, NY 12211-1462
United States

Hakan Yilmazkuday (Contact Author)

Florida International University (FIU) - Department of Economics ( email )

11200 SW 8th Street
Miami, FL 33199
United States

HOME PAGE: http://faculty.fiu.edu/~hyilmazk/

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