M.Comm. / This study attempts to investigate the validity of Wagner’s law and the Keynesian perspective of a long-run relationship and causality between government expenditure and economic growth in SADC countries from 1988 to 2004. In order to determine the existence of the long-run relationship and causality, a univariate analysis is carried out to assess whether panel series are integrated at the same order. Subsequently, this study finds that all panel series under investigation are indeed integrated of the same order. Therefore, the second stage consists of assessing whether there is cointegration between government expenditure and economic growth. This study applies two procedures of panel cointegration, namely, the Pedroni panel cointegration test and the Kao panel cointegration test. Both procedures find that certainly a long-run relationship exists between government expenditure and economic growth in the SADC. Moreover, since two equations are estimated in this study, there is unidirectional causality. In both equation 1 and 2, the study finds that economic growth Granger causes government expenditure in both the long and the short-run which is consistent with the Wagner’s law than the Keynesian stance.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:6911 |
| Date | 04 October 2010 |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Thesis |
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