Determination of The Relation between Public Expenditures and Economic Growth from The Perspective of Economıc Vıews

Abstract

The aim of this paper is to research the relationship between public expenditures and economic growth for the period 1988-2017 for the 7 upper middle income Europe and Central Asian countries. The choice of different sample group and taking of time period longer distinguishes this work from the literature. Using of the method of panel ARDL; it was dealt in Model 1 with the effect of the final consumption, military, education and health expenditures of the public relation to the real Gross Domestic Product (GDP) per capita. In Model 2,  3, 4, 5 and 6 the effect of real GDP per capita is researched on the final consumption, health, military and education expenditures of the public in order. According to the results of the analysis; the final consumption and health expenditures of the public effect the real GDP positively. This result support the Keynesian economics. Military and health expenditures of the public have negative effect on the economic growth. This result jibes with the classic economics, supply side economics, public choice theory, rational expectations theory and monetarist theory. Economic growth effects on the final consumption and military expenditures of public positively. This result corresponds with the Wagner law.