Relationship between Government Expenditure and Economic Growth in Transition Countries: Case of Kyrgyzstan and Tajikistan

After the collapse of Soviet Union the membercountries was accompanied by economic and political crises. Each country has chosen own monetary and fiscal policy considering the economic situation. Even though that their economic situation is similar, Kyrgyzstan and Tajikistan are pursuing opposite fi...

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Bibliographic Details
Published inBilig (Ankara) Vol. 83; pp. 241 - 258
Main Authors Abdieva, Raziiakhan, Baigonushova, Damira, Ganiev, Junus
Format Journal Article
LanguageEnglish
Published Ankara Ahmet Yesesvi Universitesi, Management Center 01.10.2017
Subjects
Causality
Cointegration analysis
Economic crisis
Economic growth
Fiscal policy
Government spending
Political crises
Politics
Transition economies
Kyrgyzstan
Tajikistan
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Summary:After the collapse of Soviet Union the membercountries was accompanied by economic and political crises. Each country has chosen own monetary and fiscal policy considering the economic situation. Even though that their economic situation is similar, Kyrgyzstan and Tajikistan are pursuing opposite fiscal policy. More precisely, Kyrgyzstan in recent years has changed its fiscal policy towards expansionary policy, when Tajikistan is continuing contractionary policy. This paper analyses the long and the short-run causality relationships between government expenditure and economic growth in Kyrgyzstan and Tajikistan to reveal the results of such fiscal policies on real output, using Engle-Granger Cointegration and Granger Causality Tests.Results show that, over the 2000:1-2013:4 period, there is a long run relationship between GDP and government expenditure in both countries. According to Granger Causality Test it was found anunidirectional causality from government expenditures to economic growth in Kyrgyzstan. But Granger causality test on economy ofTajikistan does not give any causality relations between these variables.
ISSN:1301-0549