Theoretical and Applied Economics
No. 3 / 2016 (608), Autumn
The relationship between public expenditure and economic growth in Romania: Does it obey Wagner’s or Keynes’s Law?
Ocean University of China, Qingdao, China
Adelina DUMITRESCU PECULEA
National University of Political Studies and Public Administration, Bucharest, Romania
Handuo XU
Ocean University of China, Qingdao, China
Abstract. After joining the European Union, Romania began a harmonization process with European requirements and best practices in both the economic and political system. This new approach influenced policy making processes with implications in fiscal and budgetary areas in order to ensure durable economic growth. The purpose of this paper is to examine the relationship between public expenditure and economic growth from the perspectives of Keynes and Wagner′s law on Romania.
Five representations of both Wagner’s and Keynes’s Law are tested, using annual time series data covering the period 1991-2014 after the fall of the Iron Curtain. To estimate the long-run relationship between government expenditure and economic growth, ARDL (Auto- Regression Distributed Lag) approach and Bounds Test based on Unrestricted Error Correction Model (UECM) estimation are used. Empirical results indicate that there exists a unidirectional long-run relationship from government expenditures to economic growth in Romania, which means the economic growth could affect the government expenditure. In contrast, Keynes’s Law does not hold for over the period.
Based on this result the government can determine the causality between economic growth and public expenditure and better formulate strategies for different faces of the economic conjuncture.
Keywords: Wagner’s law, Keynes’ law, Romanian public expenditure, economic growth, ARDL, bounds test.
Contents
- RASDAQ: The final curtain
Cornelia POP
Cristina BALINT
Maria-Andrada GEORGESCU
Ioan Alin NISTOR
- The relationship between public expenditure and economic
growth in Romania: Does it obey Wagner’s or Keynes’s Law?
Lingxiao WANG
Adelina DUMITRESCU PECULEA
Handuo XU
- Cracks in BRICs: A sectoral financial balances analysis
and implications for macroeconomic policy
Sashi SIVRAMKRISHNA
- An empirical study of factors influencing total unemployment
rate in comparison to youth unemployment rate
in selected EU member-states
Filip KOKOTOVIĆ
- Determinants of sovereign bond yields
in emerging economies: Some panel inferences
Sri Hari NAIDU. A
Phanindra GOYARI
Bandi KAMAIAH
- Investment funds and portfolio of loan guarantees
as financial steps proposals to support innovative
Small and Medium Enterprises
Mădălina Gabriela ANGHEL
Constantin ANGHELACHE
Daniel DUMITRESCU
- Dynamic relationship among foreign direct investments,
human capital, economic freedom and economic growth:
Evidence from panel cointegration and panel causality analysis
Oktay KIZILKAYA
Ahmet AY
Gökhan AKAR
- Integrating the issue of infrastructural investment
with economic growth: The case of India
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- Globalization of the corruption phenomenon –
human capital gone wild
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- Predicting probability of default of Indian companies:
A market based approach
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- Statistical-econometric model used to analyze
the operational and insolvency risks
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Mădălina Gabriela ANGHEL
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- Short and long term analysis of some factors effecting youth
unemployment in Turkey
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- Determining the causal relationships among entrepreneurship,
educational attainment and per capita GDP in high-income
OECD countries
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Seda OZEKICIOGLU
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- Assessment of the bankruptcy risk
based on the solvency ratio
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- Using simulation and modeling to improve career management
processes in organizations
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- Commodity market integration and price transmission:
Empirical evidence from India
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- Testing the relationship between military spending and private
investments: Evidence from Turkey
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- Growth-finance nexus:
Empirical evidence from India
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Umer J. BANDAY
- Net earnings trends in the EU countries
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- Communication and PR in crisis situations
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Laurențiu Gabriel FRÂNCU