Research Article
Impact of Government Expenditure on Economic Growth in Ethiopia
Teshale Degefa
,
Abera Daba*
Issue:
Volume 13, Issue 1, February 2025
Pages:
1-7
Received:
3 December 2024
Accepted:
19 December 2024
Published:
9 January 2025
DOI:
10.11648/j.ijebo.20251301.11
Downloads:
Views:
Abstract: This finding explores that the influence of various public expenditures on the economic growth of Ethiopia. The data was examined by utilising secondary sources of data from the National Bank of Ethiopia, and the World Bank. A modified version of the endogenous growth model using the Autoregressive Distribution lag model was applied to attain the effect of public expenditure, and their role in economic growth. Both descriptive and econometric analysis was applied for two separate models estimated by using the consecrated Vector autoregressive approach for the period 1970-2021. ADF-unit root test, Phillips person test, as well as pairwise Granger causality test was also used. All variables were found to be integrated at first different and stable long-run equilibrium relations occur between the dependent and independent variables. It showed that health; investment, consumption, and education expenses have a substantial effect on GDP growth in the eventually or short run. The results of the finding showed that education and expenditures have a negative and noteworthy impact on RGDP in the ultimately as well as short term. However, investment, consumption, and healthy expense were positive and significant influence eventually. An empirical finding exhibited that all variables were statistically significant, and they explained the effect of government expenditure on economic growth. In general, the results indicated that increasing government expenditure on health, investment, and consumption helps GDP, though education expenditure has a negative relation or decreases GDP growth. Thus, from the results of current finding, the government should focus on the sectors that foster economic growth, and the sectors that hinder economic growth should generate their income or transfer to other private sectors.
Abstract: This finding explores that the influence of various public expenditures on the economic growth of Ethiopia. The data was examined by utilising secondary sources of data from the National Bank of Ethiopia, and the World Bank. A modified version of the endogenous growth model using the Autoregressive Distribution lag model was applied to attain the e...
Show More
