The Impact of government expenditures on economic growth in Palestine (2000 Q1-2012Q4)‎

Other Title(s)

آثر النفقات الحكومية على النمو الاقتصادي الفلسطيني (الربع الأول 2000-الربع الرابع 2012)‎

Dissertant

Rizq, Riham Yahya

Thesis advisor

Suruji, Fathi

Comitee Members

Musa, Riyad
Ismail, Muhannad

University

Birzeit University

Faculty

Faculty of Business and Economics

Department

Department of Economics

University Country

Palestine (West Bank)

Degree

Master

Degree Date

2015

English Abstract

Using quarterly time series data of 13 years (2000-2012), this study investigates the impact of government expenditures and their components on economic growth in Palestine.

It seeks to achieve several objectives, mainly identifying the categories of government expenditures (current and capital), calculating the percentage each category forms of the total government expenditures and comparing the effect of each category on economic growth.

Moreover, this study discusses several policy implications that will be addressed to the opponent parties that might benefit from such a study.

This study discusses a very important economic fiscal tool, the government expenditures.

Monetary policy isn’t an option in the case of Palestine, as it doesn’t have its own currency.

Moreover, the fact that taxes, which are another fiscal tool, is affected by Israel, this leaves the Palestinian government with one economic tool to use in enhancing the economy, which is government expenditures.

This study gains its value from using two methods, which few of the local studies use.

It uses the Lisman and Sandee formula for transforming annual data into quarterly for some of the missing data.

The study also uses the Incremental Capital Output Ratio (ICOR) method to estimate capital where direct data are missing for such a variable.

This study uses descriptive and statistical analysis of data.

The descriptive analysis is used to describe and show the growth of some economic indicators such as capital, labor, current and capital expenditures as well as the total government expenditures.

The data are based on secondary data obtained from Ministry of Finance concerning government expenditures while the other independent variables along with GDP are collected from Palestine Central Bureau of Statistics.

The data are also analyzed using the ARDL method to test if there is a long run relationship among the variables of interest.

Moreover, VAR estimates are performed to capture the linear interdependencies among multiple time series.

The Granger Causality Test in the VAR Environment using Toda and Yamamoto Procedure is performed to test causality among the variables.

Two models are used in this study.

In the first, real gross domestic product (RGDP) forms the dependent variable while capital (estimated using ICOR method), labor (employment), total government expenditures are adopted as the independent variables.

In the second, RGDP also forms the dependent variable while labor, capital and the components of government expenditures (current and capital expenditures) form the independent variables.

Two dummy variables are used in both models to represent the political and economic events that might effect the economy of Palestine during 2000-2012.

R2, F-test and t- test are calculated along with Durbin-Watson test of autocorrelation.

The study is limited with the shortness of time coverage period as a result of recent establishment of Palestine Authority and its ministries in the past two decades as well as lacking some data for some of the variables at some of the quarters of the study.

Main Subjects

Economy and Commerce

Topics

• Economic conditions
• Public expenditures
• Palestine

No. of Pages

114

Table of Contents

• APA
• MLA
• AMA

Language

English

Data Type

Arab Theses

Record ID

BIM-620687