The Relation between Government Expenditures and Economic Growth in Thailand
7 Pages Posted: 4 May 2013 Last revised: 16 May 2013
Date Written: May 2, 2013
The notion that more government expenditures can stimulate growth is controversial. The causation between government expenditures and economic growth in Thailand is examined using the Granger causality test. There is no cointegration between government expenditures and economic growth. A unidirectional causality from government expenditures to economic growth exists. However, the causality from economic growth to government expenditures is not observed. Additionally, estimation results from the least square method with lagged variables of economic growth, government expenditures and money supply show the strong positive impact of government spending on economic growth during the period of investigation.
Keywords: Economic growth, Government expenditures, Granger causality test, Least Square Estimation
JEL Classification: H50, N15, O23
Suggested Citation: Suggested Citation