Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/35784.html
   My bibliography  Save this paper

The relationship between budgetary expenditure and economic growth in Poland

Author

Listed:
  • Gurgul, Henryk
  • Lach, Lukasz
  • Mestel, Roland
Abstract
This paper investigates the association between different kinds of budgetary expenditure and economic growth of Poland. The empirical analysis makes use of linear and nonlinear Granger causality tests to evaluate the applicability of Wagner’s Law and that of the contrasting Keynesian theory.We employ aggregate and disaggregate data with the sub-categories of most important budgetary expenditure, including health care and social security, education and science, national defence and public security expenditure and government administration expenditure for the period Q1 2000 to Q3 2008. This causality analysis indicates that total relation between budgetary expenditure and economic growth is consistent with Keynesian theory. The results of our computations have important policy implications. In case of Poland the health care expenditure was found to be as important for economic growth as expenditures on education and science. Furthermore, in order to stimulate economic growth, Polish government should consider reallocating some of national defence, public security and government administration expenditure to health care, social security, education and science expenditure.

Suggested Citation

  • Gurgul, Henryk & Lach, Lukasz & Mestel, Roland, 2011. "The relationship between budgetary expenditure and economic growth in Poland," MPRA Paper 35784, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35784
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/35784/1/MPRA_paper_35784.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mantalos Panagiotis, 2000. "A Graphical Investigation of the Size and Power of the Granger-Causality Tests in Integrated-Cointegrated VAR Systems," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 4(1), pages 1-18, April.
    2. Wolde-Rufael, Yemane, 2006. "Electricity consumption and economic growth: a time series experience for 17 African countries," Energy Policy, Elsevier, vol. 34(10), pages 1106-1114, July.
    3. Diks Cees & Panchenko Valentyn, 2005. "A Note on the Hiemstra-Jones Test for Granger Non-causality," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 9(2), pages 1-9, June.
    4. Hansen, Paul & King, Alan, 1998. "Health care expenditure and GDP: panel data unit root test results--comment," Journal of Health Economics, Elsevier, vol. 17(3), pages 377-381, June.
    5. McCoskey, Suzanne K. & Selden, Thomas M., 1998. "Health care expenditures and GDP: panel data unit root test results," Journal of Health Economics, Elsevier, vol. 17(3), pages 369-376, June.
    6. Oecd, 1996. "Internationalism of Policy-making," SIGMA Papers 6, OECD Publishing.
    7. ., 1998. "Taking Abstention Seriously," Chapters, in: The Measurement of Voting Power, chapter 8, Edward Elgar Publishing.
    8. anonymous, 1998. "Banking on Habitat," Banking and Community Perspectives, Federal Reserve Bank of Dallas, issue 4, pages 1-5.
    9. Asteriou, D. & Agiomirgianakis, G. M., 2001. "Human capital and economic growth: Time series evidence from Greece," Journal of Policy Modeling, Elsevier, vol. 23(5), pages 481-489, July.
    10. Ciarreta Antuñano, Aitor & Zárraga Alonso, Ainhoa, 2007. "Electricity consumption and economic growth: evidence from Spain," BILTOKI 1134-8984, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
    11. Easterly, William & King, Robert G & Levine, Ross & Rebelo, Sérgio, 1994. "Policy, Technology Adoption and Growth," CEPR Discussion Papers 957, C.E.P.R. Discussion Papers.
    12. Wendy L. Hansen & Thomas J. Prusa, 1996. "Congressional Decision-Making and the Rise of Delegation: An Application to Trade Policy," Departmental Working Papers 199409, Rutgers University, Department of Economics.
    13. Paresh Kumar Narayan & Russell Smyth, 2006. "Higher Education, Real Income and Real Investment in China: Evidence From Granger Causality Tests," Education Economics, Taylor & Francis Journals, vol. 14(1), pages 107-125.
    14. Chung-Nang Lai & Bwo-Nung Huang & Chin-Wei Yang, 2005. "Defense spending and economic growth across the Taiwan straits: a threshold regression model," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(1), pages 45-57.
    15. Wendy L Hansen & Thomas J Prusa, 2021. "Cumulation and ITC decision-making: The sum of the parts is greater than the whole," World Scientific Book Chapters, in: Thomas J Prusa (ed.), Economic Effects of Antidumping, chapter 9, pages 171-194, World Scientific Publishing Co. Pte. Ltd..
    16. Phillips, P.C.B., 1986. "Understanding spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 33(3), pages 311-340, December.
    17. Hitiris, Theo & Posnett, John, 1992. "The determinants and effects of health expenditure in developed countries," Journal of Health Economics, Elsevier, vol. 11(2), pages 173-181, August.
    18. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
    19. Reitschuler, Gerhard & Loening, Josef L., 2005. "Modeling the Defense-Growth Nexus in Guatemala," World Development, Elsevier, vol. 33(3), pages 513-526, March.
    20. An-Sing Chen & James Wuh Lin, 2004. "Cointegration and detectable linear and nonlinear causality: analysis using the London Metal Exchange lead contract," Applied Economics, Taylor & Francis Journals, vol. 36(11), pages 1157-1167.
    21. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    22. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    23. Oecd, 1996. "Budgeting and Policy Making," SIGMA Papers 8, OECD Publishing.
    24. Park, Wan Kyu, 1996. "Wagner's Law vs. Keynesian Paradigm: The Korean Experience," Public Finance = Finances publiques, , vol. 51(1), pages 71-91.
    25. Joseph E. Pluta, 1979. "Wagner's Law, Public Sector Patterns, and Growth of Public Enterprises in Taiwan," Public Finance Review, , vol. 7(1), pages 25-46, January.
    26. Hansen, Paul & King, Alan, 1996. "The determinants of health care expenditure: A cointegration approach," Journal of Health Economics, Elsevier, vol. 15(1), pages 127-137, February.
    27. Tsangyao Chang & Wenshwo Fang & Li-Fang Wen & Chwenchi Liu, 2001. "Defence spending, economic growth and temporal causality: evidence from Taiwan and mainland China, 1952-1995," Applied Economics, Taylor & Francis Journals, vol. 33(10), pages 1289-1299.
    28. Joerding, Wayne, 1986. "Economic growth and defense spending : Granger Causality," Journal of Development Economics, Elsevier, vol. 21(1), pages 35-40, April.
    29. Kalyoncu, Huseyin & Yucel, Fatih, 2005. "An analytical approach on defense expenditure and economic growth: the case of Turkey and Greece," MPRA Paper 4262, University Library of Munich, Germany, revised 2006.
    30. Paresh Kumar Narayan & Baljeet Singh, 2007. "Modelling The Relationship Between Defense Spending And Economic Growth For The Fiji Islands," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(4), pages 391-401.
    31. Landau, Daniel, 1996. "Is one of the 'peace dividends' negative? Military expenditure and economic growth in the wealthy OECD countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(2), pages 183-195.
    32. Pin-Huang Chou & Guofu Zhou, 2006. "Using Bootstrap to Test Portfolio Efficiency," Annals of Economics and Finance, Society for AEF, vol. 7(2), pages 217-249, November.
    33. Saunders, Peter, 1985. "Public Expenditure and Economic Performance in OECD Countries," Journal of Public Policy, Cambridge University Press, vol. 5(1), pages 1-21, February.
    34. Francis In & Chris Doucouliagos, 1997. "Human capital formation and US economic growth: a causality analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 4(5), pages 329-331.
    35. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    36. Nancy Devlin & Paul Hansen, 2001. "Health care spending and economic output: Granger causality," Applied Economics Letters, Taylor & Francis Journals, vol. 8(8), pages 561-564.
    37. Granger, Clive W. J. & Huangb, Bwo-Nung & Yang, Chin-Wei, 2000. "A bivariate causality between stock prices and exchange rates: evidence from recent Asianflu," The Quarterly Review of Economics and Finance, Elsevier, vol. 40(3), pages 337-354.
    38. Francesco Caselli, 1999. "Technological Revolutions," American Economic Review, American Economic Association, vol. 89(1), pages 78-102, March.
    39. Jostein Paulsen, 1984. "Order Determination Of Multivariate Autoregressive Time Series With Unit Roots," Journal of Time Series Analysis, Wiley Blackwell, vol. 5(2), pages 115-127, March.
    40. Karl R. DeRouen Jr., 1995. "Arab-Israeli Defense Spending and Economic Growth," Conflict Management and Peace Science, Peace Science Society (International), vol. 14(1), pages 25-47, February.
    41. de Meulemeester, Jean-Luc & Rochat, Denis, 1995. "A causality analysis of the link between higher education and economic development," Economics of Education Review, Elsevier, vol. 14(4), pages 351-361, December.
    42. R. Scott Hacker & Abdulnasser Hatemi-J, 2006. "Tests for causality between integrated variables using asymptotic and bootstrap distributions: theory and application," Applied Economics, Taylor & Francis Journals, vol. 38(13), pages 1489-1500.
    43. Hansen, Wendy L & Prusa, Thomas J, 1997. "The Economics and Politics of Trade Policy: An Empirical Analysis of ITC Decision Making," Review of International Economics, Wiley Blackwell, vol. 5(2), pages 230-245, May.
    44. Benoit, Emile, 1978. "Growth and Defense in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 26(2), pages 271-280, January.
    45. J. Paul Dunne & Ron Smith & Dirk Willenbockel, 2005. "Models Of Military Expenditure And Growth: A Critical Review," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(6), pages 449-461.
    46. Diks, Cees & Panchenko, Valentyn, 2006. "A new statistic and practical guidelines for nonparametric Granger causality testing," Journal of Economic Dynamics and Control, Elsevier, vol. 30(9-10), pages 1647-1669.
    47. Jennifer Roberts, 1999. "Sensitivity of elasticity estimates for OECD health care spending: analysis of a dynamic heterogeneous data field," Health Economics, John Wiley & Sons, Ltd., vol. 8(5), pages 459-472, August.
    48. Office of Health Economics, 2007. "The Economics of Health Care," For School 001490, Office of Health Economics.
    49. Blomqvist, A. G. & Carter, R. A. L., 1997. "Is health care really a luxury?," Journal of Health Economics, Elsevier, vol. 16(2), pages 207-229, April.
    50. Dutta, Bhaskar & Sen, Arunava, 1996. "Ranking Opportunity Sets and Arrow Impossibility Theorems: Correspondence Results," Journal of Economic Theory, Elsevier, vol. 71(1), pages 90-101, October.
    51. Aitor Ciarreta & Ainhoa Zarraga, 2010. "Electricity consumption and economic growth in Spain," Applied Economics Letters, Taylor & Francis Journals, vol. 17(14), pages 1417-1421.
    52. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    53. Horowitz, J. L., 1995. "Bootstrap Methods In Econometrics: Theory And Numerical Performance," SFB 373 Discussion Papers 1995,63, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    54. Hiemstra, Craig & Jones, Jonathan D, 1994. "Testing for Linear and Nonlinear Granger Causality in the Stock Price-Volume Relation," Journal of Finance, American Finance Association, vol. 49(5), pages 1639-1664, December.
    55. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    56. Safa Demirbas, 1999. "Cointegration Analysis-Causality Testing and Wagner's Law The Case of Turkey, 1950-1990," Discussion Papers in Economics 99/3, Division of Economics, School of Business, University of Leicester.
    57. Jen-Chi Cheng & Larry Taylor & Wenlong Weng, 2006. "Exchange rates and prices: revisiting Granger causality tests," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 29(2), pages 259-283.
    58. Chien-Hsun Chen, 1993. "Causality between Defence Spending and Economic Growth: The Case of Mainland China," Journal of Economic Studies, Emerald Group Publishing, vol. 20(6), pages 37-43, October.
    59. ., 1998. "Money and Banking," Chapters, in: Heinz D. Kurz & Neri Salvadori (ed.), The Elgar Companion to Classical Economics, volume 0, chapter 113, Edward Elgar Publishing.
    60. Anwar, Muhammad Sarfraz & Davies, Stephen & Sampath, R K, 1996. "Causality between Government Expenditures and Economic Growth: An Examination Using Cointegration Techniques," Public Finance = Finances publiques, , vol. 51(2), pages 166-184.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mursit Recepoglu, 2022. "Public Expenditures, Economic Growth and Income Inequality: Empirical Evidence from the Commonwealth of Independent States," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 9(2), pages 293-314, July.
    2. Souad HAMMAMI* & Mounir SMIDA, 2022. "What Is The Role Of The Banking Sector In Economic Growth? Case of Tunisian Banks," Noble International Journal of Economics and Financial Research, Noble Academic Publsiher, vol. 7(1), pages 24-31, March.
    3. René Cabral & André Varella Mollick & Eduardo Saucedo, 2016. "Violence in Mexico and its effects on labor productivity," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(2), pages 317-339, March.
    4. Andrew Phiri, 2017. "Nonlinearities in Wagner's law: further evidence from South Africa," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 9(3), pages 231-249.
    5. Selim Demez, 2021. "Validity of Wagner’s Law in EU Member Transition Economies: Panel Causality Analysis," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 8(2), pages 199-210, July.
    6. Goodness C. Aye & Mehmet Balcilar & John P. Dunne & Rangan Gupta & Rene� van Eyden, 2014. "Military expenditure, economic growth and structural instability: a case study of South Africa," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(6), pages 619-633, December.
    7. Khalid Zaman & Bashir Khilji, 2014. "A note on pro-poor social expenditures," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(4), pages 2121-2154, July.
    8. Suzana Balaban & Dejan Živkov, 2021. "Validity of Wagner’s Law in Transition Economies: A Multivariate Approach," Hacienda Pública Española / Review of Public Economics, IEF, vol. 236(1), pages 105-131, March.
    9. Omoshoro-Jones, Oyeyinka Sunday, 2016. "A Cointegration and Causality Test on Government Expenditure –Economic Growth Nexus: Empirical Evidence from a South African Province," MPRA Paper 102085, University Library of Munich, Germany, revised 17 Oct 2017.
    10. Bilal KARGI, 2016. "Is Wagner’s law applicable for fast growing economies? BRICS and MATIK countries," Timisoara Journal of Economics and Business, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 9(1), pages 1-15, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gurgul, Henryk & Lach, Łukasz, 2011. "Causality analysis between public expenditure and economic growth of Polish economy in last decade," MPRA Paper 52281, University Library of Munich, Germany.
    2. Gurgul, Henryk & Lach, lukasz, 2011. "The role of coal consumption in the economic growth of the Polish economy in transition," Energy Policy, Elsevier, vol. 39(4), pages 2088-2099, April.
    3. Gurgul, Henryk & Lach, Łukasz, 2012. "The electricity consumption versus economic growth of the Polish economy," Energy Economics, Elsevier, vol. 34(2), pages 500-510.
    4. Kyriakos Emmanouilidis & Christos Karpetis, 2020. "The Defense–Growth Nexus: A Review of Time Series Methods and Empirical Results," Defence and Peace Economics, Taylor & Francis Journals, vol. 31(1), pages 86-104, January.
    5. Gurgul, Henryk & Lach, Łukasz, 2012. "The association between stock market and exchange rates for advanced and emerging markets – A case study of the Swiss and Polish economies," MPRA Paper 52238, University Library of Munich, Germany.
    6. Henryk Gurgul & Łukasz Lach, 2010. "International trade and economic growth in the Polish economy," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 20(3-4), pages 5-29.
    7. Wesseh, Presley K. & Zoumara, Babette, 2012. "Causal independence between energy consumption and economic growth in Liberia: Evidence from a non-parametric bootstrapped causality test," Energy Policy, Elsevier, vol. 50(C), pages 518-527.
    8. Henryk Gurgul & Lukasz Lach, 2011. "The interdependence between energy consumption and economic growth in the Polish economy in the last decade," Managerial Economics, AGH University of Science and Technology, Faculty of Management, vol. 9, pages 25-48.
    9. Lukasz Lach, 2010. "Application of Bootstrap Methods in Investigation of Size of the Granger Causality Test for Integrated VAR Systems," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 8(2), pages 167-186.
    10. Lin, Boqiang & Wesseh Jr., Presley K., 2014. "Energy consumption and economic growth in South Africa reexamined: A nonparametric testing apporach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 840-850.
    11. Chor Foon Tang and Eu Chye Tan, 2012. "Electricity Consumption and Economic Growth in Portugal: Evidence from a Multivariate Framework Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    12. Henryk Gurgul & £ukasz Lach, 2012. "Financial Development and Economic Growth in Poland in Transition: Causality Analysis," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 62(4), pages 347-367, August.
    13. Gurgul, Henryk & Lach, Łukasz, 2010. "The causal link between Polish stock market and key macroeconomic aggregates," MPRA Paper 52250, University Library of Munich, Germany.
    14. Albert Okunade & Mustafa Karakus, 2001. "Unit root and cointegration tests: timeseries versus panel estimates for international health expenditure models," Applied Economics, Taylor & Francis Journals, vol. 33(9), pages 1131-1137.
    15. Lach, Łukasz, 2010. "Fixed capital and long run economic growth: evidence from Poland," MPRA Paper 52280, University Library of Munich, Germany.
    16. Lukasz Lach, 2011. "Impact of hard coal usage for metal production on economic growth of Poland," Managerial Economics, AGH University of Science and Technology, Faculty of Management, vol. 9, pages 103-120.
    17. Tang, Chor Foon, 2011. "Multivariate Granger Causality and the Dynamic Relationship between Health Care Spending, Income and Relative Price of Health Care in Malaysia," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 52(2), pages 199-214, December.
    18. Massa, Ricardo & Rosellón, Juan, 2020. "Linear and nonlinear Granger causality between electricity production and economic performance in Mexico," Energy Policy, Elsevier, vol. 142(C).
    19. Gbatu, Abimelech Paye & Wang, Zhen & Wesseh, Presley K. & Tutdel, Isaac Yak Repha, 2017. "The impacts of oil price shocks on small oil-importing economies: Time series evidence for Liberia," Energy, Elsevier, vol. 139(C), pages 975-990.
    20. Tang, Chor Foon, 2010. "The determinants of health expenditure in Malaysia: A time series analysis," MPRA Paper 24356, University Library of Munich, Germany.

    More about this item

    Keywords

    Government expenditure · Linear and nonlinear causality · Bootstrap techniques;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:35784. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.