The impact of disaggregated government expenditure on unemployment rates in Jordan

Abstract EN

The purpose of this study is to investigate the impact of capital and current government expenditures on unemployment rates in Jordan during the period of 1986- 2019.

The study variables are integrated of different orders as indicated by Augmented Dickey-Fuller unit root test.

Bounds cointegration test has revealed that there is a cointegrated long-run relationship between the study variables.

Therefore, the study used Autoregressive Distributed Lag approach for estimating the study model.

The results showed that both government spending components have a significant negative short-run impact on unemployment rates, while only current expenditure has a significant negative long-run impact on unemployment rates.

In order to increase the long-run effectiveness of capital public spending in reducing unemployment rates, the study recommends to increase and strengthen governance in executing investment projects, and increase the share of capital public expenditure in total public spending by blocking waste, merging of some government departments, enhancing transparency and fighting financial and administrative corruption.