Browsing by Author "Bruke, Endrias"

Now showing 1 - 1 of 1
  • No Thumbnail Available
    Item
    Productivity of Government Spending and Test of Causality Between Government Expenditure and Economic Growth
    (A.A.U, 1996-06) Bruke, Endrias; Mulat, Teshome(Dr.)
    Government expenditure as one of major instrument of fiscal policy is now becoming the growing concern in almost all countries. Countries who follow the world bank sponsored structural adjustment program (SAP) need to revise their policy of public spending . Ethiopia,being one of them , is going in restructuring its public resources allocation. Thus policy makers need to know the productivity of public expenditure. This paper deals with how public spending did behave for the last three to four decades and test the causal relation between the growing public expenditure and national income. Using Granger causality and Translog production function, the available Ethiopian data show the presence of instantaneous bidirectional causal relation between growth of real percapita income and government expenditure. The elasticity estimates of the translog production function show government expenditure on human resource development and capital expenditure have the greatest effect on economic growth. Hence,the new government of Ethiopia has to give due consideration to these sectors' development when it restructures the existing fiscal policy(expenditure restructuring).