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The effect of public expenditures on economic growth gained importance, especially after the First World War. In this study, the effect of public expenditures on economic growth was analyzed using data from the 1996-2017 period for 12 Transition Economies (Azerbaijan, Belarus, Armenia, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan) in the transition period. In this context, the relationship between public expenditures and economic growth is investigated by applying unit root test, short and long term cointegration tests and causality tests. According to the results of the analysis, there is a long-term negative cointegration relationship between public expenditures and economic growth. However, there is a two-way causal relationship between public expenditures and economic growth.

The Relationship between Public Expenditures and Economic Growth in Transition Economies