Public Expenditure and Economic Growth in Togo
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Date
2017-02-21
Authors
Yovo, Koffi
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
This paper assesses the impact of the level and composition of public expenditure
on growth in Togo. To this end, a neoclassical growth model was estimated using
the Two-Stage Least-Squares method.The findings highlight that public expenditure
during the period 1980–2009 had no significant positive effect on economic growth.
However, public consumption had a negative impact and public investment a positive
impact on growth. The maximum level at which public consumption becomes harmful
to economic growth is estimated at 16%. Similarly, the minimum level of investment
required to boost growth is estimated at 5.7%. All things being equal, a reallocation of
public expenditure following the estimated optimal composition involves an additional
increase in growth of 24%. Moreover, the study finds that increasing public expenditure
involves a crowding-out effect, suggesting the need to review the way in which public
expenditure can be financed more efficiently.
Description
Keywords
Public consumption , , public investment,