The relationship between budgetary expenditure and economic growth in Poland |
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Authors: | Henryk Gurgul ?ukasz Lach Roland Mestel |
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Institution: | (1) Department of Economics, Universiti Teknologi Mara, 85009 Johor, Malaysia;(2) Department of Development Studies, Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia;(3) Faculty of Business, University of the Sunshine Coast, Maroochydore DC, QLD, 4558, Australia |
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Abstract: | This paper investigates the association between different kinds of budgetary expenditure and economic growth of Poland. The
empirical analysis makes use of linear and nonlinear Granger causality tests to evaluate the applicability of Wagner’s Law
and that of the contrasting Keynesian theory. We employ aggregate and disaggregate data with the sub-categories of most important
budgetary expenditure, including health care and social security, education and science, national defence and public security
expenditure and government administration expenditure for the period Q1 2000 to Q3 2008. This causality analysis indicates
that total relation between budgetary expenditure and economic growth is consistent with Keynesian theory. The results of
our computations have important policy implications. In case of Poland the health care expenditure was found to be as important
for economic growth as expenditures on education and science. Furthermore, in order to stimulate economic growth, Polish government
should consider reallocating some of national defence, public security and government administration expenditure to health
care, social security, education and science expenditure. |
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Keywords: | |
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