Determination of an Optimal Threshold for Public Expenditure in Côte d'Ivoire

The objective of this article is to determine an optimal size of public expenditure in Côte d'Ivoire. We used annual secondary data covering the period 1970-2016. The quadratic model used is based on Vedder and Gallaway (1998). This model expresses a non-linear relationship between the volume of public spending and real gross domestic product (real GDP). We have found an optimal threshold for public expenditure of 34.50% of GDP in Côte d'Ivoire. A threshold above which public expenditure becomes detrimental to the health of the economy (Dar and Amirkhalkhali, 2002). If we consider the last five years, we can conclude that the Ivorian Government has reached its optimal level of public spending. This is justified by the positive GDP growth rate of 8.68% on average recorded by the Ivorian State (DGCPT, 2017). However, the achievements of socio-economic infrastructure by individual governments could only be fully appreciated if they could reduce social inequalities. Yet, the poverty line (46.3%) remains high in Côte d'Ivoire (ENV, 2015).