臺灣博碩士論文加值系統

The debate about the role of the government in the economy has been present in academic and political fields for over a hundred years. Many researchers have contributed with empirical analysis to determine whether government expenditure has a positive or negative effect on the growth rate. The studies on this topic are not yet conclusive and, for the case of the Latin American region, the literature is limited. This master thesis attempts to contribute to this analysis, by implementing an empirical model to find the relationship between government expenditure and the growth rate.
We found that the government expenditure has a negative effect on the growth rate. This means that the expansion of the government size will be detrimental for the economic growth. When the government expenditure is separated into consumption and investment, the category of government investment has no significant impact on economic growth rate. On the other hand, the government consumption has a negative and significant effect on growth. When government expenditure is separated into different sectors, most of the categories are not significant and the majority of the sectors have a negative effect on the growth rate.
Finally, by implementing a threshold regression, evidence of non-linear relationship among government size and economic growth was found for a single threshold. Thus, when the investment grows over 10% of the GDP, the negative effect of the government expenditure on the growth rate is reduced, but it is still negative. Prior to the empirical findings, the hypothesis was that the threshold existed for the variable government expenditure, which means that this variable was supposed to show two different regimes where different effects of the government expenditure are seen.

Acknowledgements i
ABSTRACT ii
Table of Contents iii
List of Figures iv
List of Tables iv
Chapter 1 Introduction 1
1.1 Background and Motivation 1
1.2 Overview of the Latin American Region 2
1.3 Objectives 6
Chapter 2 Literature Review 8
2.1 Government Size and Growth 8
2.2 Government Expenditure Composition Matters 9
2.3 Non-linear Relationship between Government Size and Growth 11
2.4 Similar Studies Focused on the Latin America Region 14
2.5 Hypothesis 16
Chapter 3 Methodology 18
3.1 Theoretical Framework 18
3.2 Research Method 21
3.3 Empirical Model, Variables and Data 24
3.3.1 Government Size 27
3.3.2 Set of Control Variables 28
Chapter 4 Summary of Data and Discussion of Empirical Results 32
4.1 Descriptive Statistics of the Data 32
4.2 Functional Composition of the Government Expenditure 38
4.3 Sectorial Composition of the Government Expenditure 43
4.4 Non-Linear Analysis 46
4.5 Alternative Estimation 49
Chapter 5 Conclusions 53
5.1 Concluding Remarks 53
5.2 Limitations and Recommendations 54
References 56
Appendix 60

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