The Effects of Public Expenditure on Economic Growth in Asia Countries: A Bayesian Model Averaging Approach

Tóm tắt

The impact of public expenditure on economic growth is a topic that has been of great interest to many researchers, e.g., [1], [10], [14], [23], [33]. However, the studies on this impact illustrate that the results are inconsistent. Besides, certain explanatory variables which should be included in the model were not specied. This ambiguity aects the reliability of the results. Using Bayesian Model Averaging (BMA) method with the data obtained from 43 Asian countries in the period 2004-2016, we estimate the impact of public expenditure on economic growth with a large number of explanatory variables included in the
model. The research results show that public expenditure has a negative impact on the economic growth in Asian countries. On the other hand, the components of public expenditure have a weak impact on economic growth. The empirical results confirm that since the majority of Asian countries are developing countries with a large proportion of state-owned sectors and low governance quality, large scale of public expenditure does not have positive eects on the economic growth. Based on the research results, this study provides policy implications to improve governance quality and eciency of public expenditures in Asian countries.