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Title: | Relationship between government expenditure and output in the problematic regions in the European Union |
Authors: | Szarowská, I. |
Issue Date: | 2013 |
Publisher: | Institute of Economics, Ural Branch of the Russian Academy of Sciences Институт экономики Уральского отделения РАН |
Citation: | Szarowská I. Relationship between government expenditure and output in the problematic regions in the European Union / I. Szarowská // Economy of Region. — 2013. — Iss. 4. — P. 190-199. |
Abstract: | Economic and debt crisis has increased the attention paid to the development of government expenditure in problematic regions in the European Union. The goal of the article is to provide direct empirical evidence on cyclicality and the long-term and short-term relationship between government expenditure and output in the Portugal, Ireland, Italy, Greece and Spain in a period 1995–2011. We have applied Johansen cointegration test and the error correction model on adjusted annual data of GDP and government expenditure in compliance with the COFOG international standard. Research confirms procyclical development of government expenditure functions on GDP in the selected countries; this procyclicality is in line with development typical for developing countries. Moreover, output and government expenditure are cointegrated for at least six of the expenditure categories in every country and it implies a long-term relationship between government expenditure and output consistent with Wagner’s law. The values of the coefficients for the short-run relationship between expenditure and output confirm the voracity hypothesis, as they suggest that in response to a given shock to real GDP, government expenditure rises by even more in percentage points. |
Keywords: | COFOG CLASSIFICATION CYCLICALITY GOVERNMENT EXPENDITURE LONG-RUN ELASTICITY SHORT-RUN ELASTICITY VORACITY EFFECT WAGNER.S LAW |
URI: | http://elar.urfu.ru/handle/10995/131896 |
Access: | info:eu-repo/semantics/openAccess |
SCOPUS ID: | 84979820316 |
ISSN: | 2411-1406 2072-6414 |
DOI: | 10.17059/2013-4-20 |
Origin: | Экономика региона. 2013. Выпуск 4 |
Appears in Collections: | Economy of Regions |
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2013_04_020.pdf | 399,82 kB | Adobe PDF | View/Open |
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