Examination of the Impact of Government Expenditures on Economic Growth in Afghanistan Using the ARDL Model

Abstract

Government expenditure, as a tool for state intervention in the economy, can significantly influence economic growth. The examination of the relationship between economic growth and government expenditure is considered one of the important economic issues, which is the focus of this research. The aim of this study is to investigate the effect of government public spending on economic growth. The data utilized are annual time series, covering the period from 1998 to 2022. The analysis of the data has been conducted using the ARDL model and the bounds cointegration test to explore both long-term and short-term relationships among the variables. The diagnostic tests of the model include assessments of heteroskedasticity, autocorrelation, stationarity of the variables, and stability tests of the model. The findings indicate that government expenditure has a positive and statistically significant effect on economic growth at a 5% significance level. Furthermore, the long-term relationships between government expenditure and economic growth are confirmed. Household savings and expenditures also have a positive and statistically significant impact on the economic growth of Afghanistan at a 5% significance level. Consequently, it is recommended that public government expenditure, particularly investment expenditure, be increased, and planning for the enhancement of savings should also be considered.