A Robust Analysis of Fiscal Policy and Economic Development: An Assessment of the Impact of Human Development Index in Middle Income Countries
Abstract
This study examines the impact of fiscal policy on economic development in disaggregated regional analysis of middle-income countries by using human development index (HDI) as a more comprehensive representation of growth and development, rather than the traditional use of gross domestic product (GDP). The study adopts the ex-post facto research design to enable us use data of 51 middle-income countries in a panel least squares regression. The hypotheses were linearly modeled, and the panel data estimation was adopted under the fixed-effect assumptions. Findings reveal that Government expenditures have a negative and significant effect on the economic development of middle-income countries, while government borrowing, government account balance have a positive and insignificant effect on the economic development of middle-income countries. The study, therefore recommends that governments of middle-income countries should engage in more productive rather than unproductive expenditures, and also try to improve on the mechanisms for the collection of revenue and expenditure to most importantly ensure prudent implementation of the expenditure policy to enhance economic development in their countries.
Full Text: PDF DOI: 10.15640/jeds.v8n2a7
Abstract
This study examines the impact of fiscal policy on economic development in disaggregated regional analysis of middle-income countries by using human development index (HDI) as a more comprehensive representation of growth and development, rather than the traditional use of gross domestic product (GDP). The study adopts the ex-post facto research design to enable us use data of 51 middle-income countries in a panel least squares regression. The hypotheses were linearly modeled, and the panel data estimation was adopted under the fixed-effect assumptions. Findings reveal that Government expenditures have a negative and significant effect on the economic development of middle-income countries, while government borrowing, government account balance have a positive and insignificant effect on the economic development of middle-income countries. The study, therefore recommends that governments of middle-income countries should engage in more productive rather than unproductive expenditures, and also try to improve on the mechanisms for the collection of revenue and expenditure to most importantly ensure prudent implementation of the expenditure policy to enhance economic development in their countries.
Full Text: PDF DOI: 10.15640/jeds.v8n2a7
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