Magazzino, Cosimo (2011): The nexus between public expenditure and inflation in the Mediterranean countries.
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The aim of this article is to assess the empirical evidence of the nexus between public expenditure and inflation for the Mediterranean countries during the period 1970-2009, using a time-series approach. After a brief introduction, a concise survey of the economic literature on this issue is shown, before discussing the data and introducing some econometric techniques. Stationarity tests reveal, generally, that public expenditure/GDP ratio is a I(1) process, while prices index is a I(2) process. Moreover, we find a long-run relationship between the growth of public expenditure and inflation only for Portugal. Furthermore, Granger causality tests results show a short-run evidence of a directional flow from expenditure to inflation for Cyprus, Malta and Spain; of a bidirectional flow for Italy; and from inflation to public expenditure for France. Some notes on the policy implications of our empirical results conclude the paper.
|Item Type:||MPRA Paper|
|Original Title:||The nexus between public expenditure and inflation in the Mediterranean countries|
|English Title:||The nexus between public expenditure and inflation in the Mediterranean countries|
|Keywords:||Public expenditure; inflation; time-series; unit root; cointegration; causality; Mediterranean countries|
|Subjects:||C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models; Multiple Variables > C32 - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy
H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level; Inflation; Deflation
N - Economic History > N4 - Government, War, Law, International Relations, and Regulation > N44 - Europe: 1913-
|Depositing User:||Cosimo Magazzino|
|Date Deposited:||29. Jan 2011 19:59|
|Last Modified:||12. Feb 2013 17:57|
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