The Impact of Government Expenditure on Economic Growth in Nepal

6 Pages Posted: 12 Jan 2018

See all articles by Rajesh Gupta

Rajesh Gupta

Quest International University

Date Written: January 9, 2018

Abstract

This study investigate the impact of government expenditure on economic growth in Nepal. Annual series data between 2002/03 to 2015/16 is used for the study. Economic growth is dependent variable whereas, total capital expenditure, total recurrent expenditure, agriculture, non-agriculture, industry, service and inflation are independent variables. The major objective of the study is to examine the effect of different component of government expenditure in economic growth in context to Nepal. Data are collected from economic survey of Nepal. The tools of analysis are the regression model between the variables, DW Test and for multicollonearity between the variables, VIF test is used.

The empirical result shows that there is positive correlation between the dependent variable economic growth and the predictors like agricultural, non-agricultural, industry and service sector. Whereas, total current and recurrent expenditure and inflation are negatively related to economic growth. The beta coefficient is positively significantly for agricultural, non-agricultural, industry, and service sector, it implies that higher the investment in agricultural and non-agricultural sector higher would be economic growth. Similarly, higher the investment on industry and service sector of the country, higher would be economic growth. More specifically, the value of D-W value is 1.301 which implies that there is no autocorrelation between the variables.

Keywords: Government expenditure, economic growth, regression, multicollinatity, autocorrelation, VIF

Suggested Citation

Gupta, Rajesh, The Impact of Government Expenditure on Economic Growth in Nepal (January 9, 2018). Available at SSRN: https://ssrn.com/abstract=3099218 or http://dx.doi.org/10.2139/ssrn.3099218

Rajesh Gupta (Contact Author)

Quest International University ( email )

Kathmandu
Lalitpur
Perak +977
Nepal
9843704840 (Phone)

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