International Journal of Business and Economics Research

| Peer-Reviewed |

The Role of Government Capital Expenditures in Economic Growth in Jordan

Received: 22 February 2019    Accepted: 12 April 2019    Published: 23 May 2019
Views:       Downloads:

Share This Article

Abstract

This research aims at examining the role of government capital expenditures in economic growth in Jordan during the time period (1977-2016). The study collects the required data from the Central Bank of Jordan, the Department of Statistics, and the Ministry of Finance database. The analyzes is based on estimating the output as a function of input and control variables and analyzing the Gross Domestic Product (GDP) as a function of the total capital expenditures. The study found that first, the change in capital expenditures as a percentage of GDP has long-term equilibrium and has a short-term effect, but this result is unreliable due to model instability. Second, there is a short-term impact of net fixed capital formation and net tax on economic growth but there is no long-term equilibrium, and finally there is a short-term and long-term effect of government debt on economic growth. These findings can provide significant insights into many aspects of implementing policy in Jordan.

DOI 10.11648/j.ijber.20190802.15
Published in International Journal of Business and Economics Research (Volume 8, Issue 2, April 2019)
Page(s) 69-77
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Economic Growth, Capital Expenditures, Gross Fixed Capital Formation, Net Tax, Government Debt

References
[1] Abu-Eideh, O. M., 2015. Causality between public expenditures and GDP growth in Palestine: An econometric analysis of Wagner's law. Journal of Economics and Sustainable Development, 6 (2), pp. 189-199.
[2] Afonso, A. and R. M. Sousa, 2012. The macroeconomic effects of fiscal policy. Applied Economics 44 (34): 4439-4454.
[3] Al Bataineh, I. M. (2012). The impact of government expenditures on economic growth in Jordan. Interdisciplinary Journal of contemporary research in business 4, no. 6 (2012): 1320-1338.
[4] Al-Fawwaz, T. M., 2015. The impact of government expenditures on economic growth in Jordan (1980-2013). International Business Research, 9 (1), p. 99.
[5] Al-Mazrouei, A. and Nejmeh, E., 2012. The Impact of Public Expenditures in Gross Domestic Product: An Empirical Study on the United Arab Emirates Through the Period (1990-2009). Damascus University Journal for Economic and Legal Science, 28 (1), pp. 611-650.
[6] Al-Shatti, A. S., 2014. The Impact of Public Expenditures on Economic Growth in Jordan. International Journal of Economics and Finance, 6 (10), p. 157.
[7] Barro, R. J., 1990. Government spending in a simple model of endogeneous growth. Journal of political economy, 98 (5, Part 2), pp. S103-S125.
[8] Barro, R. J. and Sala-i-Martin, X. (1992) Public finance in models of economic growth, Review of Economic Studies, 59, 645–61
[9] Blanchard, O. and Perotti, R., 2002. An empirical characterization of the dynamic effects of changes in government spending and taxes on output. the Quarterly Journal of economics, 117 (4), pp. 1329-1368.
[10] Chinweoke, N., Ray, N. and Paschal, N., 2014. Impact of government expenditures on Nigeria’s economic growth (1992-2011). The Macrotheme Review: A Multidisciplinary Journal of Global Macro Trends, 3 (7), pp. 79-87.
[11] Colombier, C. and Pickhardt, M. (2005) A note on public input specifications, International Advances in Economic Research, 11, 13–18.
[12] Colombier, C., 2009. Growth effects of fiscal policies: an application of robust modified M-estimator. Applied Economics, 41 (7), pp. 899-912.
[13] Colombier, C., 2011. Does the composition of public expenditures affect economic growth? Evidence from the Swiss case. Applied Economics Letters, 18 (16), pp. 1583-1589.
[14] Dandan, M. (2011). Government expenditures and economic growth in Jordan. In International Conference on Economics and Finance Research, Singapore, vol. 4, pp. 467-471.
[15] De Castro, F., 2006. The macroeconomic effects of fiscal policy in Spain. Applied Economics, 38 (8), pp. 913-924.
[16] Dritsakis, N. and Adamopoulos, A., 2004. A causal relationship between government spending and economic development: an empirical examination of the Greek economy. Applied Economics, 36 (5), pp. 457-464.
[17] Fatás, A. and Mihov, I., 2001. The effects of fiscal policy on consumption and employment: Theory and evidence. In INSEAD mimeo, CEPR Discussion Paper.
[18] Favero, C. and F. Giavazzi (2007). Debt and the effects of fiscal policy, National Bureau of Economic Research.
[19] Garba, T. (2013). Public Expenditures and Economic Growth: An Application of Cointegration and Granger Causality Tests on Nigeria. Journal of Economic and Social Research 15, no. 11.
[20] Giordano, R., Momigliano, S., Neri, S. and Perotti, R., 2007. The effects of fiscal policy in Italy: Evidence from a VAR model. European Journal of Political Economy, 23 (3), pp. 707-733.
[21] Kaur, Kirandeep, and OnkarNath Mishra. "Causal Relationship between Government Spending and Economic Growth in Rajasthan: A Toda-Yamamoto Approach." Arthshastra: Indian Journal of Economics & Research 6, no. 1 (2017): 10-22.
[22] Liu, Y., Lopez, R. A. and Zhu, C., 2014. The impact of four alternative policies to decrease soda consumption. Agricultural and Resource Economics Review, 43 (1), pp. 53-68.
[23] Mehrara, M., Abrishami, H., Boroujli, M. and Amin, M., 2013. Government expenditures and economic growth in Iran. International Letters of Social and Humanistic Sciences, 11, pp. 76-83.
[24] Mountford, A. and Uhlig, H., 2009. What are the effects of fiscal policy shocks? Journal of applied econometrics, 24 (6), pp. 960-992.
[25] Njuru, S. G., Ombuki, C., Wawire, N. and Okeri, S., 2014. Impact of Government Expenditures on Private Investment in Kenya. Journal of Economics Vol. 2, No. 8 August 2014 ISSN 2347-8233.
[26] Romer D., 2012. “ADVANCED MACROECONOMICS”, McGraw-Hill, Fourth Edition, 2012
[27] Udoka, C. O. and Anyingang, R. A., 2015. The Effect of Public Expenditures on the Growth and Development of Nigerian Economy (1980-2012). International Review of Management and Business Research, 4 (3), p. 823.
[28] Yilgör, M., Ertugrul, C. and Celepcioglu, M., 2012. The effect of public expenditures on economic growth: Turkey example. Investment Management and Financial Innovations, 9 (2), pp. 193-202.
Author Information
  • Department of Finance, School of Business, University of Jordan, Amman, Jordan

  • Department of Economy, School of Business, University of Jordan, Amman, Jordan

Cite This Article
  • APA Style

    Basema Al-Sharif, Adel Bino. (2019). The Role of Government Capital Expenditures in Economic Growth in Jordan. International Journal of Business and Economics Research, 8(2), 69-77. https://doi.org/10.11648/j.ijber.20190802.15

    Copy | Download

    ACS Style

    Basema Al-Sharif; Adel Bino. The Role of Government Capital Expenditures in Economic Growth in Jordan. Int. J. Bus. Econ. Res. 2019, 8(2), 69-77. doi: 10.11648/j.ijber.20190802.15

    Copy | Download

    AMA Style

    Basema Al-Sharif, Adel Bino. The Role of Government Capital Expenditures in Economic Growth in Jordan. Int J Bus Econ Res. 2019;8(2):69-77. doi: 10.11648/j.ijber.20190802.15

    Copy | Download

  • @article{10.11648/j.ijber.20190802.15,
      author = {Basema Al-Sharif and Adel Bino},
      title = {The Role of Government Capital Expenditures in Economic Growth in Jordan},
      journal = {International Journal of Business and Economics Research},
      volume = {8},
      number = {2},
      pages = {69-77},
      doi = {10.11648/j.ijber.20190802.15},
      url = {https://doi.org/10.11648/j.ijber.20190802.15},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijber.20190802.15},
      abstract = {This research aims at examining the role of government capital expenditures in economic growth in Jordan during the time period (1977-2016). The study collects the required data from the Central Bank of Jordan, the Department of Statistics, and the Ministry of Finance database. The analyzes is based on estimating the output as a function of input and control variables and analyzing the Gross Domestic Product (GDP) as a function of the total capital expenditures. The study found that first, the change in capital expenditures as a percentage of GDP has long-term equilibrium and has a short-term effect, but this result is unreliable due to model instability. Second, there is a short-term impact of net fixed capital formation and net tax on economic growth but there is no long-term equilibrium, and finally there is a short-term and long-term effect of government debt on economic growth. These findings can provide significant insights into many aspects of implementing policy in Jordan.},
     year = {2019}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - The Role of Government Capital Expenditures in Economic Growth in Jordan
    AU  - Basema Al-Sharif
    AU  - Adel Bino
    Y1  - 2019/05/23
    PY  - 2019
    N1  - https://doi.org/10.11648/j.ijber.20190802.15
    DO  - 10.11648/j.ijber.20190802.15
    T2  - International Journal of Business and Economics Research
    JF  - International Journal of Business and Economics Research
    JO  - International Journal of Business and Economics Research
    SP  - 69
    EP  - 77
    PB  - Science Publishing Group
    SN  - 2328-756X
    UR  - https://doi.org/10.11648/j.ijber.20190802.15
    AB  - This research aims at examining the role of government capital expenditures in economic growth in Jordan during the time period (1977-2016). The study collects the required data from the Central Bank of Jordan, the Department of Statistics, and the Ministry of Finance database. The analyzes is based on estimating the output as a function of input and control variables and analyzing the Gross Domestic Product (GDP) as a function of the total capital expenditures. The study found that first, the change in capital expenditures as a percentage of GDP has long-term equilibrium and has a short-term effect, but this result is unreliable due to model instability. Second, there is a short-term impact of net fixed capital formation and net tax on economic growth but there is no long-term equilibrium, and finally there is a short-term and long-term effect of government debt on economic growth. These findings can provide significant insights into many aspects of implementing policy in Jordan.
    VL  - 8
    IS  - 2
    ER  - 

    Copy | Download

  • Sections