Public expenditures and economic growth: an empirical examination for Greece by cointegration analysis

Abstract

This paper investigates the relationship between the public expenditures and the economic
growth using annual data covering the period from 1960 to 2001 for Greece. The purpose of this
paper is to test the long-run relationship between the public expenditures and the economic
growth using the cointegration analysis as suggested by Johansen and Juselious. Then an error
correction model is applied to estimate the short-run and the long-run relationships of the
model's variables and the prediction of public expenditures as well. The results of our analysis
show that there is a long-run relationship between the public expenditures and the economic
growth for Greece.