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Charles E. Thomas. Process Technology Equipment and Systems. Distillation systems. United States, 2015, 361-399 p.
EFFECTS OF GOVERNMENT EXPENDITURES ON THE ECONOMIC
GROWTH IN THE REPUBLIC OF NORTH MACEDONIA
Liza Alili Sulejmani
Asst. Prof. Dr. Faculty of Economics and Administrative Sciences, International Balkan University, North Macedonia
Email: liza.a.sulejmani@gmail.com
ABSTRACT
There is large evidence regarding the effects of government expenditures on the economic growth in both developing and developed
countries, yet the results are mixed regarding this nexus. Thus, the main aim of this paper is to address the significant association
between government expenditures and economic growth in the Republic of Macedonia for the last two decades and to address such
results in form of recommendation regarding fiscal policy changes in the near future. Firstly, in order to check the stationarity of the
time series 2000q1 – 2018q4, Augmented Dickey Fuller test is performed, while VECM it is used to determine the long-run
relationship between government expenditures and economic growth.
Findings reveal the existence of a long run relationship between government expenditures and economic growth, thus government
expenditures have a positive impact on the real GDP growth in the case of the Republic of North Macedonia.
Additionaly, the paper does not resolve the long existing debate regarding the nexus between government expenditures and economic
growth, but rather it will serve as further contribution on the existing literature regarding this nexus. Finally, it will help for the
policymakers for better efficiency usage of government expenditures in this country
.
Keywords:
government expenditures, economic growth, VECM.
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Alesina, A., Perroti, R., (1996): Fiscal adjustments in OECD countries: composition and macroeconomic effects, NBER, Cambridge,
no.5730.
Barro, R., 1990. Government spending in a simple model of endogenous growth. Journal of Political Economy 98 (1), s103–117
Blanchard, O. J., and R. Perotti, 2002. An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and
Taxes on Output, Quarterly Journal of Economics, No. 117
Bleaney, M.F., N. Gemmel and Kneller, R. (2001). “Testing the Endogenous Growth Model: Public Expenditure, Taxation, and Growth
Over the Long Run”, Canadian Journal of Economics 34, 1, 36-57.
Devarajan, S., Swaroop, V., Zou, H., 1996. The composition of public expenditure and economic growth. Journal of Monetary
Economics 37 (3), 313–344
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