The Impact of Government Spending on Economic Growth: The Case of Taiwan

• Main Authors: Ji-Ya Chang, 張智雅
• Other Authors: Chiung-Ju Huang
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/53122947806716969860

碩士 === 逢甲大學 === 會計與財稅所 === 92 === Abstract Taiwan is a small island with not many natural resources; however, the economic growth rate is increasing over past five decades. It is an economic miracle. Recent one decade, although government spending in Taiwan was sharply increasing, the economic growth rate was not followed. Did the government spending cause an increase or a decrease in the economic growth rate? What is the impact of government expenditure upon economic growth? What is the relationship between government spending and economic growth? The purpose of this study is to investigate impacts of government expenditure upon economic growth in Taiwan. In this study, vector error correction model (VECM) is developed. The variables used in the model include: GDP, investment, import, export, and government spending. Annual observations spanning 1966 to 2002 are used. Empirical results show that economic growth has significantly positive impacts upon government expenditure and government spending has positive but not significant impacts upon economic growth. Therefore, there is a unidirectional causality between government spending and economic growth. Keywords: government spending, vector error correction model, Taiwan