The Relation of Public Expenditure to Economic Growth

This study attempts to investigate the long run relationship between national income and government expenditures by focusing on HIPC and developed country using panel data.  The objective is to ascertain whether there is a long run relationship between national expenditure and economic growth. More specifically, the study attempts to ascertain the long run relationship between different component of public expenditure and the economic growth.  Vector Error Correction model will be used instead of the standard Granger- causality test as most of the previous study used.