Abstract
A significant positive influence of both government size and domestic investment on economic growth is found in the long run during 1970–2006 for a sample of 19 emerging market economies, employing panel co-integration testing and estimating the parameters using dynamic ordinary least square method, for all the indicators, excepting the case when one chooses general government final consumption expenditure as a percentage of GDP a measure of government size and gross capital formation as a percentage of GDP a measure of domestic investment, with per capita GDP a proxy for economic growth. The findings corroborate the argument that diverse results of the earlier studies are due to different measures adopted.
Notes
1. The results having (i) individual effect as an exogenous variable and (ii) with no exogenous variable, are not reported in and can be obtained after request.
2. The panel co-integration test for Model 1 and Model 3 are not reported here and can be made available from the author upon request.