Growth-Government Spending Nexus: The Evidence of Thailand

  • Wanissa Suanin Faculty of Economics, Thammasat University, Thailand
Keywords: Economic growth, Government expenditure, Thailand

Abstract

This paper empirically examines the impact of different types of government expenditure on economic growth in Thailand. A General to Specific Model (GSM) is used to estimate the short-run and long-run effects of such expenditure on growth, employing quarterly data for the period 1993-2014. Our findings indicate that only budgetary and extra-budget fund (EBF) expenditure yield growth enhancing effects in both short-run and long-run timeframes. The effect of the direct loan net of budget deficit financing is not found to be statistically significant due to its potential crowding-out effect on private investment. However, the growth-enhancing effect of EBFs is far smaller when compared with traditional growth engines like private investment and/or budgetary expenditure. These results draw the policy implication that budgetary expenditure remains the most preferable mode for the government to increases spending within the economy. In addition, the role of the government should be supportive to allow the private sector to drive economic growth.

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Published
2017-12-22
How to Cite
Suanin, W. (2017). Growth-Government Spending Nexus: The Evidence of Thailand. Thailand and The World Economy, 35(3), 1-33. Retrieved from https://so05.tci-thaijo.org/index.php/TER/article/view/137996