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Public expenditure composition and economic growth: the Portuguese case
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Orientador(es)
Resumo(s)
The thesis examines the effect of government expenditure composition on Portuguese economic growth over the last decades. The theoretical foundation of this study is based on a simple endogenous growth model, whose solution is a reduced form equation that depends on public expenditure. A government sectoral expenditure database was constructed for Portugal and the reduced form equation was estimated providing results for the short and long-run effects of public expenditure in education items on economic growth. The results suggest significant differences in the effects of public expenditure items, not only considering their nature, but also in terms of short and long-run time analysis. Under these results, public expenditure has a positive effect both in the short and long-run. While positive, the result of public expenditures on economic affairs is lower than public affairs on education. Conversely, public expenditure in social protection has a negative impact in the short-run and a higher negative impact in the long-run.
Health public spending seems to have a positive effect in the short-run, but contributes negatively for economic growth in the long-run.
In addition, a cointegration model was estimated using the government sectoral expenditure database. The results show that in the long-run, public expenditures on education have a positive effect in economic growth. Conversely, public expenditures on health and economic affairs have a negative impact in the output growth. A final implication suggests that public spending on health increases public spending on social protection. Alternative econometric models were also tested, namely the VAR approach, but they revealed inadequate for this analysis.
Descrição
A Work Project, presented as part as the requirements for the Award of a Masters Degree in Economics from the Nova School in Business and Economics
Palavras-chave
Public Expenditure Economic Growth Portuguese Economy JEL Codes: H51-H52-H56