Title: Government expenditure and economic growth in Zimbabwe: an ARDL-bounds testing approach

Authors: Kunofiwa Tsaurai; Nicholas M. Odhiambo

Addresses: Department of Finance, Risk Management and Banking, University of South Africa, P.O. Box 392, UNISA, 0003, Pretoria, South Africa ' Department of Economics, University of South Africa, P.O. Box 392, UNISA, 0003, Pretoria, South Africa

Abstract: In this study, we examine the causal relationship between government expenditure and economic growth - using the recently developed ARDL-bounds testing approach. The causal relationship between government expenditure and economic growth has been a subject of extensive debate in recent years. Currently, there exist three views regarding the relationship between government expenditure and economic growth. The first view maintains that it is government expenditure that drives economic growth. The second view argues that it is economic growth that spurs government expenditure. The third view maintains that both government expenditure and economic growth promote one another. The results of our study show that there is a unidirectional causal flow from economic growth to government expenditure. This applies both in the short run and in the long run. The causal flow from government expenditure to economic growth, however, could only be detected in the short run.

Keywords: Zimbabwe; government expenditure; economic growth; ARDL-bounds testing.

DOI: 10.1504/IJEPEE.2013.054474

International Journal of Economic Policy in Emerging Economies, 2013 Vol.6 No.1, pp.78 - 90

Received: 22 Jan 2013
Accepted: 23 Mar 2013
Published online: 28 Jun 2014 *

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