THE SIGNIFICANCE OF EXPENDITURE POLICY IN FOSTERING ECONOMIC GROWTH (CASE OF ARMENIA)
DOI:
https://doi.org/10.46991/BYSU.G/2024.15.2.120Keywords:
economic growth, budget expenditure, correlation matrix, regression model, evaluationAbstract
Budget expenditures can have a significant positive or negative impact on the economy of the country. The article refers to the dynamics, structure and interrelationship of economic growth and budget expenditures in Armenia. The impact of Armenia's budget expenditures, as well as individual items of the functional classification of budget expenditures, on economic growth was estimated using the least squares method. For the research have been used quarterly data during the 2000-2003 period.
According to the results of the regression analysis, overall budget expenditures of Armenia have a positive effect on economic growth: an increase of 1 percent of budget expenditure would tend to increase economic growth by 0.14 percent after two quarters, all other things being equal.
From the items of the functional classification, spending on health and general public services has a positive effect on economic growth: an increase of 1 percent of health expenditure, economic growth will increase by 0.07% after 3 quarters, and an increase of 1 percent of expenditure on general public services will increase the economic growth by 0.05% after two quarters, all other things being equal.
Spending on defense and public order and safety activities will reduce economic growth: a 1% increase in public order and safety spending will reduce economic growth by 0.06% after two quarters, ceteris paribus.
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