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The Demand for Current Public Expenditure in Fiji: Theory and Empirical Results

Doessel, Darrel and Valadkhani, Abbas (2003): The Demand for Current Public Expenditure in Fiji: Theory and Empirical Results. Published in: The Middle East Business and Economic Review , Vol. 15, No. 2 (2003): pp. 14-25.

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Abstract

The purpose of this paper is to analyse government expenditure in Iran using annual time series data for the period 1963-2000. Various theories of the size of government are reviewed and a distinction is made between economic/structural determinants and institutional determinants. Categorising the theories of government expenditure in this way suggests the application of non-nested tests as a mechanism whereby the relative importance of the two broad theoretical categories can be determined. The empirical results, indicating "double rejection", reveal that neither the economic/structural determinants nor the institutional determinants alone are sufficient to explain government expenditure in Iran. A comprehensive, incorporating explanatory variables from both models provides a robust explanation of the data. This paper presents the first empirical estimates of the own-price elasticity of the demand, and income elasticity of the demand, for current government expenditures in Iran.

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