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Government expenditures and economic growth in South Korea : A VAR approach

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  • Government expenditures and economic growth in South Korea
  • Cheng, Benjamin S.; Lai, Tin Wei
  • Chung-Ang University(Economic Research Institute)


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Title Government expenditures and economic growth in South Korea
Similar Titles
Sub Title

A VAR approach

Material Type Articles
Author(English)

Cheng, Benjamin S.; Lai, Tin Wei

Publisher

[Seoul]:Chung-Ang University(Economic Research Institute)

Date 1997-06
Journal Title; Vol./Issue Journal of Economic Development:vol. 22(no. 1)
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Macroeconomics
Economy < Financial Policy
Holding Chung-Ang University

Abstract

This paper examines the causality between government expenditure and economic growth along with money supply in a trivariate framework by applying a VAR techniques to South Korean data for the period 1954-94. The Phillips-Perron (PP) unit roots tests and Johansen's tests of cointegration are performed. The diagnostic tests for adequacy of the model also performed and passed. This study finds that there is a bidirectional causality between government expenditures and economic growth in South Korea. It is also found that money supply affects economic growth as well. The results are consistent with some of the past studies that detect a feedback between GDP and expenditure.