Public expenditure and economic growth in the Gulf Cooperation Council countries

Abstract

This article uses a dynamic model calibrated to the Gulf Cooperation Council (GCC) countries' data to examine the nature of the relationship between government expenditure and economic growth. The article finds that national income is a predictive factor of the expanding role of government as postulated by Wagner. Empirical investigations do not support the hypothesis of public expenditure causing national income as proposed by the Keynesian theory.