The Impact of Sectoral Government Expenditure on Economic Growth

Evidence from Sri Lanka

S Tharshan, W L M A Liyanage, P G K Nilakna, E. A. Selvanathan, Maneka Jayasinghe, Saroja Selvanathan

Research output: Working paperDiscussion paperResearch

Abstract

This paper investigates the impact of sectoral government expenditure on economic growth using Sri Lanka as a case study. For this purpose, we use Sri Lankan data at the national and sectoral levels for the period 1985-2016. In the empirical analysis, six different models were estimated at the aggregate and sectoral levels taking two cases of the dependent variable, namely the real GDP and per capita real GDP growth rate. Results indicate that government expenditure plays a positive and significant role in improving the level of GDP in Sri Lanka. However, economic growth was lower during the war years compared to non-war years in Sri Lanka. The results also indicate that capital expenditure plays a positive and significant role in enhancing economic growth. At the sectoral level, expenditure on health, education, and transport and communication appear to have a positive impact on the economy, while expenditure on agriculture and irrigation demonstrate a negative impact. Expenditure on defence, on the other hand, indicated mixed results, depending on the model specification. These findings provide some important insights for the policy makers in the country to consider when allocating sectoral level government expenditure budgets.
Original languageEnglish
PublisherGriffith University
Pages1-11
Number of pages11
Publication statusPublished - 2019
Externally publishedYes

Publication series

NameThe Economics and Business Statistics Discussion Paper Series
PublisherGriffith University

Fingerprint

Economic growth
Government expenditure
Sri Lanka
Expenditure
Real GDP
Agriculture
Politicians
Model specification
Capital expenditures
Empirical analysis
Irrigation
Communication
Health education
GDP growth

Cite this

Tharshan, S., Liyanage, W. L. M. A., Nilakna, P. G. K., Selvanathan, E. A., Jayasinghe, M., & Selvanathan, S. (2019). The Impact of Sectoral Government Expenditure on Economic Growth: Evidence from Sri Lanka. (pp. 1-11). (The Economics and Business Statistics Discussion Paper Series). Griffith University.
Tharshan, S ; Liyanage, W L M A ; Nilakna, P G K ; Selvanathan, E. A. ; Jayasinghe, Maneka ; Selvanathan, Saroja. / The Impact of Sectoral Government Expenditure on Economic Growth : Evidence from Sri Lanka. Griffith University, 2019. pp. 1-11 (The Economics and Business Statistics Discussion Paper Series).
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abstract = "This paper investigates the impact of sectoral government expenditure on economic growth using Sri Lanka as a case study. For this purpose, we use Sri Lankan data at the national and sectoral levels for the period 1985-2016. In the empirical analysis, six different models were estimated at the aggregate and sectoral levels taking two cases of the dependent variable, namely the real GDP and per capita real GDP growth rate. Results indicate that government expenditure plays a positive and significant role in improving the level of GDP in Sri Lanka. However, economic growth was lower during the war years compared to non-war years in Sri Lanka. The results also indicate that capital expenditure plays a positive and significant role in enhancing economic growth. At the sectoral level, expenditure on health, education, and transport and communication appear to have a positive impact on the economy, while expenditure on agriculture and irrigation demonstrate a negative impact. Expenditure on defence, on the other hand, indicated mixed results, depending on the model specification. These findings provide some important insights for the policy makers in the country to consider when allocating sectoral level government expenditure budgets.",
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Tharshan, S, Liyanage, WLMA, Nilakna, PGK, Selvanathan, EA, Jayasinghe, M & Selvanathan, S 2019 'The Impact of Sectoral Government Expenditure on Economic Growth: Evidence from Sri Lanka' The Economics and Business Statistics Discussion Paper Series, Griffith University, pp. 1-11.

The Impact of Sectoral Government Expenditure on Economic Growth : Evidence from Sri Lanka. / Tharshan, S; Liyanage, W L M A ; Nilakna, P G K; Selvanathan, E. A. ; Jayasinghe, Maneka; Selvanathan, Saroja.

Griffith University, 2019. p. 1-11 (The Economics and Business Statistics Discussion Paper Series).

Research output: Working paperDiscussion paperResearch

TY - UNPB

T1 - The Impact of Sectoral Government Expenditure on Economic Growth

T2 - Evidence from Sri Lanka

AU - Tharshan, S

AU - Liyanage, W L M A

AU - Nilakna, P G K

AU - Selvanathan, E. A.

AU - Jayasinghe, Maneka

AU - Selvanathan, Saroja

PY - 2019

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N2 - This paper investigates the impact of sectoral government expenditure on economic growth using Sri Lanka as a case study. For this purpose, we use Sri Lankan data at the national and sectoral levels for the period 1985-2016. In the empirical analysis, six different models were estimated at the aggregate and sectoral levels taking two cases of the dependent variable, namely the real GDP and per capita real GDP growth rate. Results indicate that government expenditure plays a positive and significant role in improving the level of GDP in Sri Lanka. However, economic growth was lower during the war years compared to non-war years in Sri Lanka. The results also indicate that capital expenditure plays a positive and significant role in enhancing economic growth. At the sectoral level, expenditure on health, education, and transport and communication appear to have a positive impact on the economy, while expenditure on agriculture and irrigation demonstrate a negative impact. Expenditure on defence, on the other hand, indicated mixed results, depending on the model specification. These findings provide some important insights for the policy makers in the country to consider when allocating sectoral level government expenditure budgets.

AB - This paper investigates the impact of sectoral government expenditure on economic growth using Sri Lanka as a case study. For this purpose, we use Sri Lankan data at the national and sectoral levels for the period 1985-2016. In the empirical analysis, six different models were estimated at the aggregate and sectoral levels taking two cases of the dependent variable, namely the real GDP and per capita real GDP growth rate. Results indicate that government expenditure plays a positive and significant role in improving the level of GDP in Sri Lanka. However, economic growth was lower during the war years compared to non-war years in Sri Lanka. The results also indicate that capital expenditure plays a positive and significant role in enhancing economic growth. At the sectoral level, expenditure on health, education, and transport and communication appear to have a positive impact on the economy, while expenditure on agriculture and irrigation demonstrate a negative impact. Expenditure on defence, on the other hand, indicated mixed results, depending on the model specification. These findings provide some important insights for the policy makers in the country to consider when allocating sectoral level government expenditure budgets.

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Tharshan S, Liyanage WLMA, Nilakna PGK, Selvanathan EA, Jayasinghe M, Selvanathan S. The Impact of Sectoral Government Expenditure on Economic Growth: Evidence from Sri Lanka. Griffith University. 2019, p. 1-11. (The Economics and Business Statistics Discussion Paper Series).