Does Relation between Government Consumption and Economic Growth Still Exist? Evidence from Long Run Data

Abstract

The relation between government consumption in the context of fiscal policies and economic growth was investigated in the related literature. The effect of government expenditures on economic growth and needs for government expenditures in the growth path of an economy were explained by researchers and reached various results for each country. In this study, it is aimed that interaction between government expenditures and economic growth in the Turkish economy via advanced econometric methods between years 1971 and 2019. By doing so, longer period will be considered to get more robust results. Results imply that there is a bi-directional causality between government expenditures and economic growth in the Turkish economy. This result is valid in the long run. In the shorter time frequencies, direction of causality turns into uni-directional running from government expenditures to economic growth. © 2021, Statistical Economic and Social Research and. All rights reserved.