The Effect Of Government Consumption On The Average Growth Of Real Gdp Per Capita

2691 Words Dec 8th, 2014 11 Pages
Econometrics Empirical Project

THE EFFECT OF GOVERNMENT CONSUMPTION ON THE AVERAGE GROWTH OF REAL GDP PER CAPITA
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Heidi Zhuge

Content

Introduction……………………………………………………………………………….. 3
Literature Review………………………………………………………………………… 3

Data……………………………………………………………………………………….. 6 Sources……………………………………………………………. 6 Transformation…………………………………………………….6 Description…………………………………………………………6

Regression Models………………………………………………………………………12 Model 1……………………………………………………………..12 Model 2………………………………………………..……………13 Model 3…………………………………..…………………………14 Model 4…………………..…………………………………………15 Model 5……..………………………………………………………16

Results…………………………………………………………………………………….18 Assumptions………………………………………………………..18 Summary Table ..…………………………………..………………18 Interpretation………………………………………………………..20 Conclusion…………………………………………………………..21

Introduction
GDP is an important measure that indicates an economy’s performance and affects employment, inflation and foreign trade among others. Extensive research has been done on the factors that impact real GDP growth, but many different models exist and there is no consensus that is universally accepted. One important influence is government expenditure but economic theory does not clearly state the relationship between government spending and GDP growth. Free market supporters believe that government expenditure will lower real GDP per capita since they expect that government expenditure in…
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