What is it about?
This study examines the direction of causality between government expenditure and economic growth in the Economic Community of West African States (ECOWAS). The paper addresses the possibility of a feedback effect in the causal relationship between government spending and economic growth.
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Why is it important?
We adopt the recently developed panel vector autoregressive (PVAR) model built within the two-step system generalized method of moments (GMM) in order to resolve the inherent problems of endogeneity and persistence in the model. This is important because ignoring the possibility of feedback in macro relations (i.e. between government expenditure and economic growth) tend to obscure both the direction and the nature of causality.
Perspectives
Writing this article was a great pleasure. It enjoyed the rich contributions of the co-authors. This article also leads us to reconsider the effectiveness of government interventions to achieve the desired macroeconomic outcomes in developing economies.
Olumide OLAOYE
Obafemi Awolowo University
Read the Original
This page is a summary of: Government expenditure and economic growth nexus in ECOWAS countries, Journal of Economic and Administrative Sciences, November 2019, Emerald,
DOI: 10.1108/jeas-01-2019-0010.
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