The nonlinear impact of government consumption expenditure on economic growth: Evidence from low and low-middle income countries

Figures & data

Table 1. Information of different groups of the study

Group	GNI per capita (2006)	Country	Period
Low income (LIC)	$905 or less	21	1981–2007
Low-middle income (LMC)	$906–$3595	11	1981–2007
Full sample	$3595 or less	32	1981–2007

Table 2. Linear regression model

Group	Constant	GL	IY	GS	OPN	R^2/${\overline{R}}^2$	Hausman
LIC	.031 (−2.102)^b	1.272 (4.919)^a	.026 (.703)	−.001 (−.012)	.050 (2.477)^b	.132 (.094)	10.64^a
LMC	−.023 (−1.189)	.421 (2.545)^b	.089 (3.052)^a	−.202 (−2.208)^b	.069 (3.934)^a	.263 (.226)	15.52^a
Full sample	−.023 (−2.02)^b	.739 (5.074)^a	.053 (2.259)^b	−.042 (−.79)	.056 (4.148)^a	.162 (.127)	14.25^a

Note: Numbers in parentheses are t-statistics.

^a Significance at the 1% level.

^b Significance at the 5% level.

^c Significance at the 10% level.

Table 3. Tests for thresholds

Single threshold
Group	OGS		F1	Critical values (10, 5, and 1%)	Bootstrap p-value
LIC	.162		20.158	11.33, 13.61, 18.62	.007^a
LMC	.169		20.036	11.23, 13.67, 18.64	.006^a
Full sample	.177		25.530	10.93, 13.49, 18.79	.001^a
Double threshold
Group	OGS1	OGS2	F2	Critical values (10, 5, and 1%)	Bootstrap p-value
LIC	.162	.225	6.386	8.88, 10.64, 14.73	.240
LMC	.169	.199	13.646	11.10, 13.79, 20.01	.051
Full sample	.103	.177	9.298	9.36, 11.32, 15.81	.102

^a Significance at the 1% level.

Table 4. The optimal government size, 95% confidence interval and single-threshold regression

Group	LIC		LMC		Full sample
Optimal government size
	16.2%		16.9%		17.7%
95% Confidence interval
	[13.7–17.3%]		[16.5–16.9%]		[17.2–19.9%]
Threshold
	GS ≤ 16.2	GS > 16.2	GS ≤ 16.9	GS > 16.9	GS ≤ 17.7	GS > 17.7
	↓	↓	↓	↓	↓	↓
Constant	−.051 (−2.501)^b	.045 (1.289)	−.032 (−1.202)	−.005 (−.191)	−.050 (−3.316)^a	.040 (1.788)^c
GL	1.095 (4.027)^a	1.745 (2.399)^b	−.543 (−1.768)^c	.769 (3.996)^a	.943 (5.973)^a	.374 (1.153)
IY	−.029 (−.568)	.128 (2.365)^b	.110 (3.169)^a	.115 (2.235)^b	.037 (1.326)	.095 (2.424)^b
GS	.220 (1.525)	−.196 (−2.018)^b	.092 (.531)	−.365 (−2.853)^a	.116 (1.189)	−.139 (−1.665)^c
(ß13 − ß23)	.416 (2.374)^b		.458 (2.094)^b		.255 (1.971)^b
OPN	.068 (3.139)^a	−.044 (−1.417)	.061 (3.134)^a	.068 (3.516)^a	.066 (4.589)^a	.010 (.605)
R^2, ${\overline{R}}^2$	.068 (.118)^a		.318 (.263)		.187 (.148)

Note: Numbers in parentheses are t-statistics.

^a Significance at the 1% level.

^b Significance at the 5% level.

^c Significance at the 10% level.

Table 5. Mean government consumption expenditure as a share of GDP

Country	1981–2000	2001–2005	2006–2007	Country	1981–2000	2001–2005	2006–2007
Ratio of government consumption expenditure to GDP < minimum optimal value*
Albania	12.75	14.40	12.47	Iran	14.94	10.81	10.37
Bangladesh	4.16	4.71	5.11	Mozambique	11.97	13.17	13.75
Benin	10.59	9.81	9.54	Niger	14.28	12.41	12.61
Cameroon	10.76	10.66	11.28	Pakistan	9.94	9.05	11.67
Comoros	23.37	14.24	12.46	Senegal	15.52	12.39	11.49
Egypt	9.21	9.01	8.28	Somalia	10.44	9.96	9.96
Gambia	14.04	9.42	8.90	Sudan	9.75	14.51	14.33
Guinea	7.79	5.56	5.70	Togo	13.40	10.38	11.30
Guinea-bissau	13.79	17.12	17.00	Tunisia	16.10	15.56	15.07
Indonesia	7.29	6.35	6.76	Uganda	9.84	9.15	9.22
Ratio of government consumption expenditure to GDP > maximum optimal value**
Algeria	19.34	20.77	22.18	Maldives	17.58	24.37	34.15
Burkina faso	19.72	19.13	18.84	Mali	16.61	17.31	18.94
Chad	43.92	29.81	29.18	Mauritania	20.45	27.38	19.80
Cote d’ivoire	21.96	22.74	22.47	Morocco	15.76	17.80	18.06
Djibouti	35.59	28.51	28.26	Nigeria	05.10	08.19	22.74
Guyana	10.78	16.87	17.65	Sierra leone	08.13	17.39	18.79

* 13.7% for LIC and 16.5% for LMC.

** 17.3% for LIC and 16.9% for LMC.

Table A1. Selected countries

Low income (LIC)	Bangladesh^as	Benin^af	Burkina faso^af	Chad^af
	Comoros^af	Cote d’ivoire^af	Gambia^af	Guinea^af
	Guinea-bissau^af	Mali^af	Mauritania^af	Mozambique^af
	Niger^af	Nigeria^af	Pakistan^as	Senegal^as
	Sierra leone^af	Somalia^af	Sudan^af	Togo^af
	Uganda^af
Low-middle income (LMC)	Albania^e	Algeria^af	Cameroon^af	Djibouti^af
	Egypt^af	Guyana^sa	Indonesia^as	Iran^as
	Maldives^as	Morocco^af	Tunisia^af

Source: http://www.sesric.org/databases-index.php.

Notes: af: Africa, as: Asia, e: Europe, sa: South America.

Table A2. Panel unit root test

	GGDP^F	GL^T	IY^T	GS^T	OPN^T
Levin, Lin and Chu
LIC	−14.84^a	−1.66^b	−3.74^a	−3.80^a	−3.96^a
LMC	−9.01^a	−1.88^b	−.14	−1.74^b	−1.88^b
Full sample	−17.13^a	−2.23^b	−2.80^a	−4.02^a	−4.34^a
Fisher-ADF
LIC	259.15^a	122.21^a	72.17^a	94.79^a	77.84^a
LMC	122.24^a	78.20^a	33.81^c	37.46^b	54.40^a
Full sample	381.40^a	200.41^a	105.97^a	132.25^a	132.24^a

Notes: H₀: unit root. F: Individual fixed effects, T: Individual fixed effects and individual trends.

^a Significance at the 1% level.

^b Significance at the 5% level.

^c Significance at the 10% level.