Abstract

MOLINA DIAZ, Germán  and  GANTIER MITA, Marcelo. Public Expenditure and its effect in the Bolivian Economy: Period 1990-2015. Perspectivas [online]. 2017, n.39, pp.7-42. ISSN 1994-3733.

The present research analyzes the importance of public expenditure for the Bolivian economy. In order to investigate the subject, it is proposed to find the causal direction between government expenditure and gross domestic product in Bolivia during the 1990 -2015 period, later two sub-periods are analyzed with a cut in the year 2005. In order to do a revision of Wagner's Law and Keynesian theory, a Vector Autorregresive Model was estimated, to later perform the respective Granger causality tests to be able to define the causal direction between both variables. The results show that for the different periods analyzed the Keynesian theory is fulfilled, nevertheless the magnitude and significance of the expenditure multiplier varies depending on the period under analysis.

Keywords : Granger Causality; Government Expenditure; Wagner's Law; Keynes.

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