Vector Auto Regressive Analysis identifying government expenditure policy impact on sustainable economic development

Abstract

This research investigates the effects of government expenditure in Uganda on infrastructure in promoting sustainable economic. The study used a longitudinal research design using financial records from financial years 1984-85 to 2015-16 as population with a sample size of 32 annual observations. The Johansen cointegration test indicates a long-run association between government expenditure in infrastructure, communication, electricity, and financial development. The Granger- Connection findings shows indirect connection between economic development rate and all the parts of public spending that were used with P-Value 0.04 and lastly, the Vector Auto Regressive (VAR) consequences indicated that public spending on infrastructure, communication, and energy, had a direct effect on economic development rate with P-Value 0.00. The paper recommended that extra spending on substantial infrastructures such as roads, airports, railways, water facilities, electricity, and communication add extensively to the economic development rate by growing the efficiency of the public and private sectors.