Theoretical and Applied Economics
No. 3 / 2016 (608), Autumn
The relationship between public expenditure and economic growth in Romania: Does it obey Wagner’s or Keynes’s Law?
Ocean University of China, Qingdao, China
Adelina DUMITRESCU PECULEA
National University of Political Studies and Public Administration, Bucharest, Romania
Handuo XU
Ocean University of China, Qingdao, China
Abstract. After joining the European Union, Romania began a harmonization process with European requirements and best practices in both the economic and political system. This new approach influenced policy making processes with implications in fiscal and budgetary areas in order to ensure durable economic growth. The purpose of this paper is to examine the relationship between public expenditure and economic growth from the perspectives of Keynes and Wagner′s law on Romania.
Five representations of both Wagner’s and Keynes’s Law are tested, using annual time series data covering the period 1991-2014 after the fall of the Iron Curtain. To estimate the long-run relationship between government expenditure and economic growth, ARDL (Auto- Regression Distributed Lag) approach and Bounds Test based on Unrestricted Error Correction Model (UECM) estimation are used. Empirical results indicate that there exists a unidirectional long-run relationship from government expenditures to economic growth in Romania, which means the economic growth could affect the government expenditure. In contrast, Keynes’s Law does not hold for over the period.
Based on this result the government can determine the causality between economic growth and public expenditure and better formulate strategies for different faces of the economic conjuncture.
Contents
RASDAQ: The final curtain
The relationship between public expenditure and economic growth in Romania: Does it obey Wagner’s or Keynes’s Law?
Cracks in BRICs: A sectoral financial balances analysis and implications for macroeconomic policy
An empirical study of factors influencing total unemployment rate in comparison to youth unemployment rate in selected EU member-states
Is real depreciation expansionary? The case of the Czech Republic
Determinants of sovereign bond yields in emerging economies: Some panel inferences
Investment funds and portfolio of loan guarantees as financial steps proposals to support innovative Small and Medium Enterprises
Dynamic relationship among foreign direct investments, human capital, economic freedom and economic growth: Evidence from panel cointegration and panel causality analysis
Integrating the issue of infrastructural investment with economic growth: The case of India
Globalization of the corruption phenomenon – human capital gone wild
Productivity spillovers from FDI in Turkey: Evidence from quantile regressions
Predicting probability of default of Indian companies: A market based approach
Which country after Greece? Sustainability of budget deficits in selected EU countries: A panel cointegration analysis with multiple structural breaks under cross-section dependence
Statistical-econometric model used to analyze the operational and insolvency risks
Short and long term analysis of some factors effecting youth unemployment in Turkey
Determining the causal relationships among entrepreneurship, educational attainment and per capita GDP in high-income OECD countries
Assessment of the bankruptcy risk based on the solvency ratio
Using simulation and modeling to improve career management processes in organizations
Commodity market integration and price transmission: Empirical evidence from India
Testing the relationship between military spending and private investments: Evidence from Turkey
Growth-finance nexus: Empirical evidence from India
The importance and role of small and medium-sized businesses
Skill biased technological changes: Case of the MENA Region
Net earnings trends in the EU countries
Communication and PR in crisis situations