Fiscal Policy, Government Size and Economic Performance: Empirical Evidence from Selected Asean Countries

THE UNIVERSITY OF TAMPERE

TRAN THI HA

FISCAL POLICY, GOVERNMENT SIZE AND ECONOMIC PERFORMANCE: EMPIRICAL EVIDENCE FROM SELECTED ASEAN COUNTRIES

Tran Thi Ha

19.1.2012

Master’s Thesis

University of Tampere School of Management
Author: Tran Thi Ha
Title: Fiscal policy, government size, and economic performance: Empirical evidence from ASEAN countries
Master’s thesis: 73 pages
Date: February 2012
Keywords: Fiscal policy, growth, government expenditure, ASEAN countries
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ABSTRACT

In an endogenous growth model with public finance including tax, expenditure and components of government expenditure by function, this study characterizes fiscal policy for some ASEAN economies, also the relationship between the growth rate, tax rate and expenditure shares on the GDP. Moreover, it examines the impact of different components of government expenditure by function on economic growth. I use panel data of two samples. There are seven ASEAN countries in first sample and five ASEAN countries in second sample over 28 years. I use linear regression techniques for panel data. According to estimation results, government spending has negative and significant effects on the growth rate. In contrast, tax revenue has positive impact on economic growth. My empirical results are obtained by using Barro model (1990) and Devarajan et al. (1996).

TABLE OF CONTENT

ABSTRACT 2

LIST OF TABLES 4

1. Introduction 5

1.1 research background 5 1.2 The research problems, delimitation, and the research target 6 1.3 research approach

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