Title: Toda-Yamamoto causality test for government expenditure and economic growth: a case study in Indonesia

Authors: Setyo Tri Wahyudi; Sigit Harjanto

Addresses: Faculty of Economics and Business, Universitas Brawijaya, 65145, Indonesia ' Faculty of Economics and Business, Universitas Brawijaya, 65145, Indonesia

Abstract: This research aims to identify the causality between economic growth and government expenditure. Using Toda-Yamamoto Causality Test, we found a unidirectional causality between economic growth and government expenditure, in which government expenditure affects economic growth, confirming Wagner's Law. In terms of expenditure in its economic function, the relationship that supports Keynesian approach between economic growth and government expenditure is evident. However, there is no causality between other functions of government expenditure and economic growth.

Keywords: economic growth; government expenditure; Toda-Yamamoto; causality; Wagner's Law; Indonesia.

DOI: 10.1504/JGBA.2022.127992

Journal for Global Business Advancement, 2022 Vol.15 No.2, pp.181 - 195

Accepted: 26 Jan 2021
Published online: 04 Jan 2023 *

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