Investigating the relationship of government revenue and expenditure on economic growth using a generalized method of moments: Does state-level panel ensure sustainable growth?

The current research project investigates the correlation between economic growth, government spending, and public revenue in seventeen Indian states spanning the years 1990 to 2020. An analysis of the relationship between key fiscal policy variables and economic growth was conducted utilising a pan...

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Bibliographic Details
Published in:PloS one 2024-05, Vol.19 (5), p.e0301764-e0301764
Main Authors: Sumandeep, Kiran, Ravi, Sharma, Rakesh Kumar
Format: Article
Language:English
Subjects:
Capital expenditures
Economic Development
Economic growth
Fiscal policy
GDP
Generalized method of moments
Government
Government spending
Gross Domestic Product
Growth models
Humans
India
Investigations
Method of moments
Models, Economic
Panel data
Per capita
Public Expenditures
Public finance
Purchasing power parity
R&D
Research & development
Research projects
Revenue
State government
Sustainable Development - economics
Tax revenues
Taxation
Variables
Citations: Items that this one cites
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Summary:The current research project investigates the correlation between economic growth, government spending, and public revenue in seventeen Indian states spanning the years 1990 to 2020. An analysis of the relationship between key fiscal policy variables and economic growth was conducted utilising a panel data approach, the Generalised Method of Moments (GMM), and fully modified Ordinary Least Squares (FMOLS & DOLS) estimation. In our investigation, we assessed the impacts of non-tax revenue, development plan expenditure, tax revenue, and development non-plan expenditure on (i) the net state domestic product (NSDP) and (ii) the NSDP per capita. The findings indicate that the selected fiscal variables are significantly related. The results indicate that expeditious expansion of the fiscal sector is obligatory to stimulate economic growth in India and advance the actual development of the economies of these states.
ISSN:1932-6203
1932-6203
DOI:10.1371/journal.pone.0301764