<abstract xmlns="http://www.w3.org/1999/xhtml"><bold>Research background:</bold> Although a number of studies have been conducted on the relationship between public expenditure and economic growth, it is difficult to tell with certainty whether or not an increase in public expenditure is good for economic growth. This lack of consensus on the results of the previous empirical findings makes this study of paramount importance as we take stock of the available empirical evidence from the 1980s to date.<bold>Purpose:</bold> In this paper, theoretical and empirical literature on the relationship between government expenditure and economic growth has been reviewed in detail. Focus was placed on the review of literature that assessed the impact of government spending on economic growth.<bold>Research Methodology:</bold> This study grouped studies on the impact of public expenditure on economic growth based on their results. Three groups emerged – positive impact, negative impact and no impact. This was followed by a review of each relevant study and an evaluation of which outcome was more prevalent among the existing studies on the subject.<bold>Results:</bold> The literature reviewed has shown that the impact of government spending on economic growth is not clear cut. It varies from positive to negative; with some studies even finding no impact. Although the impact of government spending on economic growth was found to be inconclusive, the scale tilts towards a positive impact.<bold>Novelty:</bold> The study provides an insight into the relationship between public expenditure and economic growth based on a comprehensive review of previous empirical evidence across various countries since the 1980s.</abstract>

Research background: Although a number of studies have been conducted on the relationship between public expenditure and economic growth, it is difficult to tell with certainty whether or not an increase in public expenditure is good for economic growth. This lack of consensus on the results of the previous empirical findings makes this study of paramount importance as we take stock of the available empirical evidence from the 1980s to date.Purpose: In this paper, theoretical and empirical literature on the relationship between government expenditure and economic growth has been reviewed in detail. Focus was placed on the review of literature that assessed the impact of government spending on economic growth.Research Methodology: This study grouped studies on the impact of public expenditure on economic growth based on their results. Three groups emerged – positive impact, negative impact and no impact. This was followed by a review of each relevant study and an evaluation of which outcome was more prevalent among the existing studies on the subject.Results: The literature reviewed has shown that the impact of government spending on economic growth is not clear cut. It varies from positive to negative; with some studies even finding no impact. Although the impact of government spending on economic growth was found to be inconclusive, the scale tilts towards a positive impact.Novelty: The study provides an insight into the relationship between public expenditure and economic growth based on a comprehensive review of previous empirical evidence across various countries since the 1980s.

The Impact of Public Expenditure on Economic Growth: A Review of International Literature

Department of Economics, College of Economic & Management Sciences

Folia Oeconomica Stetinensia

This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License.

Research background: Although a number of studies have been conducted on the relationship between public expenditure and economic growth, it is difficult to...

The Impact of Public Expenditure on Economic Growth: A Review of International Literature

Published Online: Dec 26, 2019

Page range: 81 - 101

Received: Mar 01, 2019

Accepted: Oct 09, 2019

DOI: https://doi.org/10.2478/foli-2019-0015

Keywords
public expenditure, government expenditure, government size, economic growth, impact

© 2019 Sheilla Nyasha et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License.

The Impact of Public Expenditure on Economic Growth: A Review of International Literature

Published Online: Dec 26, 2019

Page range: 81 - 101

Received: Mar 01, 2019

Accepted: Oct 09, 2019

DOI: https://doi.org/10.2478/foli-2019-0015

Keywordspublic expenditure, government expenditure, government size, economic growth, impact

© 2019 Sheilla Nyasha et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License.

Keywords
public expenditure, government expenditure, government size, economic growth, impact