Open AccessNexus between Public Expenditure and Economic Growth in Nepal
Author(s) -
Rajendra Kumar Shah,
Tara Prasad Bhusal
Publication year - 2017
Publication title -
the economic journal of nepal
Language(s) - English
Resource type - Journals
ISSN - 1018-631X
DOI - 10.3126/ejon.v40i1-4.35946
Subject(s) - nexus (standard) , economics , government expenditure , public expenditure , aggregate expenditure , government spending , government (linguistics) , proxy (statistics) , error correction model , short run , macroeconomics , cointegration , economic expansion , econometrics , public finance , market economy , linguistics , philosophy , machine learning , computer science , welfare , embedded system
The article attempts to identify the relationship between public expenditure and economic growth in Nepal. Public expenditure is a fundamental element for the economic growth. On employing, ARDL bound test on data set for the period of 1975-2016, it is found that there in a long-run relationship between the public expenditure and economic growth. The bound test and error correction term clearly specify that there exists a long run relationship between government expenditure and economic growth in Nepalese economy. From the empirical study, it is found that government expenditure has significant influence on real GDP, which is proxy for economic growth. The study confirms the Keynesian theory of making government expenditure to boost economic growth of Nepal.