Influence of Government Expenditure on Economic Growth: An Empirical Retrospection Based on ARDL Approach

Abstract

The study investigates the influence of government expenditure (GE) on Oman’s economic growth by examining different government-spending dimensions as predictors of economic progression based on collected time-series data of Oman for 30 years. The study uses ‘Auto-Regressive Distributed Lag’ (ARDL) to assess the short-range and long-term effects of the dimensions on economic growth. GE, personal consumption expenditure and public debt are significant negative predictors of Oman’s economic progress in the long run. However, government and private consumption expenditures (PCEs) are significantly negative in the short run. Gross domestic investment is not a significant predictor in the long run, whereas public debt is a substantial positive predictor of Oman’s economic growth in the short run. The study will help policymakers recognize GE in Oman’s economic progression and development.