The Impact of Government Expenditure on Economic Growth in Libya During the Pried 1975-2019

An Econometric Study using Adhoc and Almon models

Abstract

In this study, the relationship between economic growth and government spending for the period 1994-2014 was analyzed using the Adhoc model and the Allmon model, which is one of the distributed lag models. Since there is a very high correlation between government expenditure, the effects of economic growth and government expenditure have been examined using models Ladhoc model, Allmon model In this analysis of the models, the lag value is defined as 2 according to Bayesian criteria using this lag length. Regression analysis was performed by creating a distributed lag model for government spending and economic growth in the period studied, and according to the model ADHOK, current government spending and changes in lagged values of the first year of government spending had an effect. A positive impact on economic growth in the current year, and a negative impact in the second previous year. The results of the Allmon model also showed that government spending had a negative and positive impact on economic growth in the past two years. A positive relationship is found between economic growth and government spending in the current year and a negative relationship in the previous periods t-1 and t-2. Increase in economic growth 74 percent in response to a one unit increase in government spending in the current year, a 52 percent decrease in economic growth versus a one unit change in government spending one year ago, and a one unit change two years ago in government spending resulting in a 2.06% decrease In economic growth. The negative effect continues to increase until the effect becomes equal to zero by increasing the effect of government spending in previous periods after two years.