Essays on Economic Growth, Public Expenditure and Telecommunication Infrastructure
Date: 23 November 2016
University of Exeter
PhD in Economics
This thesis consists of four studies, presented in three main essays, empirically linking economic growth to public expenditure and telecommunication infrastructure using four different sample groups of countries with data from 1972-2012. In the second chapter, in Study 1, the permanent growth effects of fiscal policy are investigated ...
This thesis consists of four studies, presented in three main essays, empirically linking economic growth to public expenditure and telecommunication infrastructure using four different sample groups of countries with data from 1972-2012. In the second chapter, in Study 1, the permanent growth effects of fiscal policy are investigated across countries with different income levels using the public-policy endogenous growth model, where public spending is classified by function. The endogeneity problems associated with taxes and investment are taken into account, as is a possible non-linear relationship between government expenditure and economic growth. The results have shown that gross capital formation is the only control variable that has a significant positive coefficient in all growth regressions, while the evidence of conditional convergence hypothesis is reaffirmed. An increase in transportation and communication spending is conducive to growth in both developing and high-income countries, whereas other types of spending are not. In the third chapter, in Study 2, we firstly consider the relationship between public spending and growth with a government budget constraint. The evidence for productive expenditure being conducive to growth only exists in high-income OECD countries. Distortionary taxes are shown to have growth-deteriorating effects in both the developing country and the high-income OECD country groups. When considering the relationship between public spending and long-run GDP per capita level in Study 3, it was found that an increase in total spending financed by non-distortionary taxes enhances the per capita level of GDP in high-income OECD countries. Regardless of implicit financing elements, increases in total spending in developing countries cannot promote long-run increases in GDP per capita levels. In developing countries, increases in the shares of health care and general public services in spending can improve long-run GDP per capita. In high-income OECD countries, increasing in the share of education in spending is conducive to increasing per capita GDP in the long-run. In the fourth chapter, in Study 4, we assess the link between telecommunication infrastructure and economic development. The system of equations is used while considering stationarity and cointegration of variables in the models. The output dividend of fixed telephones in the period from 1975 to 1990 for the group of high-income OECD countries is higher than for developing countries. When considering mobile phone infrastructure, an increase in penetration has positive effects on aggregate output in developing countries for the period from 1990 to 2012. There is only weak evidence that increased mobile phone penetration in high-income OECD countries has a negative effect. When fixed telephone penetration is low, an increase in mobile phone penetration enhances aggregate output. When fixed telephone penetration is already high, an increase in mobile phone penetration might have deteriorating effects. The results have shown that mobile phone and fixed telephone infrastructures are, in fact, substitutes for one another rather than complements.
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