The Effect Of Government Expenditure Economics Essay

The Effect Of Government Expenditure Economics Essay Pakistan stood categorized in the sixties by high rates of growth and it was widely believed that this exclusive preoccupation with growth had resulted in concentration of income in a few rich families. It has been argued that the manufacturing sector received favorable treatment at the hands of government policy thereby redistributing income from agriculture to industrial sector through over-valued exchange rate for industrial Sector, provision of cheap credit, liberal import of capital goods at below equilibrium cost of capital. The relationship between government expenditure and economic growth has continued to generate series of debate among scholars. Government performs two functions- protection (and security) and provisions of certain public goods Protection function consist of the creation of rule of law and enforcement of property rights. This helps to minimize risks of criminality, protect life and property, and the nation from external aggression. Under the provisions of pu blic goods are defense, roads, education, health, and power, to mention few. Some scholars argue that increase in government expenditure on socio-economic and physical infrastructures encourages economic growth. For example, government expenditure on health and education raises the productivity of labor and increase the growth of national output. Similarly, expenditure on infrastructure such as roads, communications, power, etc, reduces production costs, increases private sector investment and profitability of firms, thus fostering economic growth. However, some scholars did not support the claim that increasing government expenditure promotes economic growth, instead they assert that higher government expenditure may slowdown overall performance of the economy. For instance, in an attempt to finance rising expenditure, government may increase taxes and/or borrowing. Higher income tax discourages individual from working for long hours or even searching for jobs. This in turn reduces income and aggregate demand. In the same vein, higher profit tax tends to increase production costs and reduce investment expenditure as well as profitability of firms. Moreover, if government increases borrowing (especially from the banks) in order to finance its expenditure, it will compete (crowds-out) away the private sector, thus reducing private investment. Furthermore, in a bid to score cheap popularity and ensure that they continue to remain in power, politicians and governments officials sometimes increase expenditure and investment in unproductive projects or in goods that the private sector can produce more efficiently. Thus, government activity sometimes produces misallocation of resources and impedes the growth of national economy. Public Finance is to provide information to all arms of government in other to provide useful data as done for the developed nations that transferred Pubic Finance technology to developing countries. However, the public finance technological transfer has not been used in developing countries to develop their economies. One of the assumptions might have been due to culture mingled with public finance information made available to policy makers. The realities have been x-rayed by public finance and practices. Thus, ID omen citied the following: Economic growth represents the expansion of a countrys potential GDP or output. 2. OBJECTIVE: 1. Short run relationship between government expenditure and economic growth of Pakistan. 2. Long run relationship between government expenditure and economic growth of Pakistan. 3. LITERATURE REVIEW: Ranjan KD, Sharma C Examined the effect of government development expenditure on economic growth during the period 1950-2007. The authors discovered a significant positive impact of government expenditure on economic growth. They also reported the existence of co integration among the variables. Easterly and Rebelo (2009) find that public investment in transport and communications in developing countries leads to higher economic growth. Abdullah HA, 2000 analyzed the relationship between government expenditure and economic growth. The author reported that the size of government is very important in the performance of economy. He advised that government should increase its spending on Infrastructure, social and economic activities. In addition, government should encourage and support the private sector to accelerate economic growth. Ogiogio GO Revealed a long-term relationship between government expenditure and economic growth. Moreover, the authors findings showed that recurrent expenditure exerts more influence than capital expenditure on growth. On empirical research using panel data, one can cite (among others) the papers by Devarajan et al. (1996) henceforth DSZ and Gupta et al. (2005) On the composition of government expenditure and growth for a sample of developing countries. DSZ found a negative (positive) and significant relationship between the capital (current) component of public expenditure and per capita real GDP growth for 43 countries over the period 1970-1990, while Gupta et al. (2005) found quite the reverse for 39 countries between 1990 and 2000. Lee et al. (2009), commenting on Islam (2009), observe that slope heterogeneity, even when random, causes major difficulties for estimation in dynamic panels. They contend that potential heterogeneity in growth rates of different countries renders the standard fixed effects panel estimator to be biased. Given the importance of slope heterogeneity as an econometric issue (see, among others, Baltagi (1995), and Pesaran and Smith (1995), we extend the methodology implemented by DSZ by explicitly modelling the potential cross-country heterogeneity in capital and current expenditure. The fixed effects panel estimator used in DSZ assumes that all the slope coefficients, adjustment dynamics and error variances are invariant across all countries. However, these assumptions are unlikely to hold, because countries are not unanimous in their views on the role of government expenditure in fostering growth, and this largely depends on the political stance of the party in power. The importance assigned to capital and current expenditures, i.e., the 1 commitment to spend on viable long-term capital projects vis-a-vis the spending on recurrent types of expenditure like wages and salaries, subsidies and pension arrangements, also vary across countries. The potential cross-country variations in the parameters of the level and composition of public expenditure are consequently modelled as a linear function of country-specific levels of current and capital spending in this paper. Wagner says, (1999:46) That there is a positive relationship between the per capital income of the citizens in a country with government spending such that the income elasticity of government expenditure is always greater than one. However, other researchers have discovered that the relationship is not always certain because there are periods when government expenditure in relations to the national income will decline when the elasticity of income to government expenditure is less than one. Ram Rati (1986) concluded that overall impact of government size and government expenditures on growth is positive. Rostow Musgrave model (1999:46) carried out a research on growth of public expenditure and concluded that, at the early stages of economic development, the rate of growth of public expenditure will be very high because government provides the basic infrastructural facilities (social overheads) and most of these projects are capital intensive, therefore, the spending of the government will increase steadily. The investment in education, health, roads, electricity, water supply are necessities that can launch the economy from the practitioner stage to the take off stage of economic development, making government to spend and increasing amount with time in order to develop an egalitarian society. To illustrate, models with varieties of capital goods is related to technological process corresponds to an expansion of the number of capital goods, the production function Barros (1979) Tax-smoothing hypothesis says that, if the marginal cost of raising tax revenue is increasing the optimal tax rate is a martingale. This implies that changes in the tax rate will be permanent and, given their different effects on growth, under the two types of growth models, very useful in empirically distinguishing between the exogenous and endogenous models. THEORETICAL BACKGROUND: According to the Keynesian there is increase in government expenditure, the country will grow, holding other things constant. Y = C + I + G+ (X-M ) Y = GDP C=consumption I= Investment (X-M)=Net exports 4. DATA AND METHODOLOGY: Data is collected on annual basis from the year 1972 to 2008 from various issues of economic survey of Pakistan and IFS (International Financial statistics) for GDP and government expenditure. That is converted into growth form. Oxmatrics software is used for estimation. Model: Y=f (GE) Where GE=Government expenditures The model is specified as Y=ÃŽ ±+ ÃŽ ² (GE) +  µ Where GE=Government expenditures  µ=error term Y = GDP growth 5.Estimation technique: Unit root Test: Both series GDP and GE are unit root. AS ADF greater than critical value so we can further proceed for co integration. Regression model: After regression disequilibrium saved the residuals , further test the residuals for stationary , so the residual is stationary it means co integration is exist between GDP and government expenditures. Unit root for disequilibrium: As ADF is less than critical value so the series is stationary and co integration exists. ERROR CORRECTION MODEL: Now check the long run relationship between government expenditures and GDP growth by ECM. This is error correction model Dgdp = + 0.9029*DLgov 0.8551*deq_1 So the value of dis equilibrium is negative and lies between 0 to 1 there exists long run relationship between two variables. 6. Policy implications: The results suggest that the economic growth can be achieved by increasing government expenditures. As we know that increase in government expenditures has also other implications for the economy and this study is limited in scope. So we suggest that government expenditures hike will increase GDP keeping other things constant.

Jill Bolte Taylor’s Stroke of Insight

Report I Title: Jill Bolte Taylor's stroke of insight Link: http://www. ted. com/talks/jill_bolte_taylor_s_powerful_stroke_of_insight. html Speaker: Jill Bolte Taylor Affiliation: http://www. drjilltaylor. com Jill Bolte Taylor is a Harvard-trained and published neuroanatomist who dedicated her career to research into the severe mental illnesses. She had a stroke while she was researching about biological differences between healthy brains and brains of individuals diagnosed with schizophrenia, schizoaffective or bipolar disorder at1996.One of her blood vessel exploded on the left side of her brain and it caused the stroke. In the seminar, she explains her observations about the 4 hour after the stroke as a neuroanatomist. According to her experience she could not able to walk, talk read, write or recall any of her life. In this talk, initially she explains the major functions of the brain with a real human brain. Then she clarifies her stroke according to these functions. She tells the results of her bleeding step by step with examples and helps us to imagine a stroke.After all she finishes her speech with explaining her feelings after she survived and recovered. Beside Jill Bolte Taylor’s stroke of insight video, I watched videos about being happy â€Å"Dan Gilbert asks, Why are we happy? †, about intelligence of plants â€Å"Stefano Mancuso: The roots of plant intelligence† and about brain damages â€Å"VS Ramachandran on your mind†. I generally watched the videos about brain and intelligence because I interested in the human intelligence and brain functions. Mr.Gilbert’s talk showed me the effects of our psychological immune system to be happy, Mr. Mancuso’s talk represented me the intelligence of plants which is similar to animals’ and Mr. Ramachandran’s talk helped me to illustrate the brain functions of human while he was talking about the brain damages. All of these topics were interesting but I mo stly interested in Taylor’s topic because she had a disease which is about her researches and she survived from it without any permanent damage. I liked to hear this neuroanatomy specialist’s own life experiments about brain disease.Favorite quotes and sentences: â€Å"I essentially became an infant in a woman’s body. † â€Å"For those of you who understand computers, our right hemisphere functions like a parallel processor, while our left hemisphere functions like a serial processor. † About Jill Bolte Taylor’s stroke of insight video, I did not understand why and how she felt that she is in nirvana after she woke up after the surgery. I strongly recommend this video to the other students because it is one of the most interesting speech I have ever heard.

Dominican and Italian

Jonathan D. Iulo October 27, 2010 Topic: Comparison Essays My Italian and Dominican families English 105 I come from two different backgrounds which are very similar but different. I chose to write my comparison essay about the Dominican culture which comes from my mother’s side and the Italian culture which is my father’s. Comparing and showing the similarities of both cultures is very interesting since I grew up with both in the house. Both cultures try to keep most of their homeland tradition here in the United States.These include religion, morals and values, customs, language, music, and food. The Italians and the Dominicans are family oriented. The male role such as the father is being the care taker financially and plays an important role in decision making in the house. The men in both cultures are the protectors. Many men in both cultures are said to be jealous, which probably comes from being over protective. They tend to be overprotective of their wifeâ€℠¢s and their daughters. The men is perceived to be the† Macho† in the family and the women are more of a â€Å"delicate† symbol.In both cultures, it is more acceptable for a man to have more than one girlfriend than for a woman. The female role such as the mother is the care giver, the one that soothes you when you are in need and the one that cooks. Women are the ones that hold the family together specially the mother and grandmother. Everyone comes to them for guidance. Women are supposed to preserve themselves for one man, although that is changing. The family always gets together on weekends and holidays. The family is very important and both love to eat.Even though Italians love pasta and Dominicans love their rice and beans; they have the coffee in common. They can drink coffee at breakfast, lunch, and dinner and it’s usually espresso. Both cultures also enjoy bread. They eat bread with coffee, chocolate milk, and food in general. Italians and Dominic ans love gardening. Italians like to produce their own fresh vegetables like zucchini, eggplants, and tomatoes. Dominicans like to plant flowers of many kinds, as well as peppers and cilantro, like my mom.There is a great respect for the mother and the elders. The mothers are the ones that mainly guide you spiritually and you need their approval when it comes to relationships. They both want their children to have an Italian or a Dominican as a future wife or husband. The elders are the keepers of history memories and are the root of the family. The grandparents are usually the ones teaching you the native language, in this case Spanish and Italian. Most Italians and Dominicans are catholic and religion plays an important part in their lives.The special religious events, seasons, and the church in the community are part of the cultural traditions. Thanksgiving, Christmas, and Easter traditions are very special events to both Dominicans and Italians. During these religious holidays t he immediate and extended families get together for church and home festivities. The families enjoy the prayers, food, and music together. Both cultures are very similar and I believe this is one of the reasons my parents and the family get along well and I enjoy being part of both worlds.

Lithification Defined and Explained

Lithification Defined and Explained Lithification is how soft sediments, the end product of erosion, become rigid rock (lithi- means rock in scientific Greek). It begins when sediment, like sand, mud, silt and clay,  is laid down for the last time and becomes gradually buried and compressed under new sediment. Sediments Fresh sediment is usually loose material that is full of open spaces, or pores, filled with air or water. Lithification acts to reduce that pore space and replace it with a solid mineral material. The main processes involved in lithification are compaction and cementation. Compaction involves squeezing the sediment into a smaller volume by packing the sediment particles more closely, by removing water from the pore space (desiccation) or by pressure solution at the points where sediment grains contact each other. Cementation involves filling pore space with solid minerals (usually calcite or quartz) that are deposited from solution or that enable existing sediment grains to grow into the pores. The pore space does not need to be eliminated for lithification to be complete. All of the processes of lithification can continue to modify a rock after it has first become a rigid solid. Diagenesis Lithification occurs entirely within the early stage of diagenesis. Other words that overlap with lithification are induration, consolidation, and petrifaction. Induration covers everything that makes rocks harder, but it extends to materials that are already lithified. Consolidation is a more general term that also applies to the solidification of magma and lava. Petrifaction today refers specifically to the replacement of organic matter with minerals to create fossils, but in the past it was more loosely used to mean lithification. Alternate Spellings: lithifaction

Becoming a Video Game Designer essays

Becoming a Video Game Designer essays It has been 10 years since I became an addicted gamer when I was 11 years old. I always dreamed of designing a game of my own. I have came up with many nice ideas about video games from what I have played and I believed one day my dream will come true. However, the reality was disappointing. My parents were worried about the fact that I spent hours sitting in front of the screen and playing video games. As a result, I had to give up what I wanted to do and chose mathematics as my major. But after watching the video in class I started rethinking about it. Just assuming, what if I chose to be a video game designer? What is needed for it? How can you be a part of it? Also, what is the future of this job? After doing researches, I found that in fact, the video game industry is a multi-billion dollar industry. One person could sit down and make a game from start to finish by himself. Now a game can take millions of dollars and dozens of people to make. However, before deciding on a career in this multi-billion dollar industry, someone must see if he or she has the right type of personality and understands the different types of careers and where the video game industry is headed. Many people don't seem to understand what being a game designer really means. If you randomly ask most gamers, they'll probably tell you the designer is the person in charge of a game's vision. While truth is being a game designer is a lot of work. Usually, a game designer oversees the entire process from art and programming down to things as small as enemy and scene and level design. If someone was thinking about becoming a game designer then he or she should grasp concepts in art, programming as well as production. Being a game designer requires the personality blend of a punk star and a rocket scientist. You have to be able to imagine a virtual world while at the same time have the technical knowledge to make it happen. "Game designers have a good ble...

Econ Assignment Essay Example | Topics and Well Written Essays - 1000 words

Econ Assignment - Essay Example The fall in income earned by the consumers in the U.S. could be viewed as its impact on the current account. It is estimated that almost 10% of every Dollar spent by U.S. customers is on purchase of imported goods (Kaplan) however as the income falls in the U.S. the customers demand for imported goods will surely be affected. As consumers spend less on goods and services the proportion they spend on imports will reduce. The effect would be rising current account surplus and positive balance of payments. If the inflation in the foreign country increases it will have an upward effect on the cost of production in that country and making its exports to the U.S. more expensive than its imports. This suggests that U.S. consumers would end up paying more for imported goods that will provoke them to switch over to less costly goods produced domestically (Kaplan). This can also have a reverse effect on the U.S. exports thereby increasing the current account surplus with that country in the short run till inflation remains comparatively higher in the foreign country. The interest rate fall in the U.S. has its impact on the capital account of the country. The decline in interest rates in the U.S. implies the reduction in the return on savings and relative return in the financial markets of the U.S. This suggests that foreign investors will be reluctant to invest in the financial markets who will be seeking greater returns in other foreign markets. This makes the local financial markets unattractive and may lead to outflow of funds through capital markets. The exchange rate is the relative price of a currency against other currencies. The exchange rate is typically driven by the demand and supply of the currency. As consumers will use less of the local currency due to fall in their income it suggests a lower demand for it as less money will be spent on imported goods and services therefore its supply dampens. The net result is decline in the exchange rate against

How does Being an Outsider Affect Ones Life Assignment

How does Being an Outsider Affect Ones Life - Assignment Example There is a deep sense of insecurity in the mother. She feels the child wants to be like the locals, who stand for authority and have the power to crush little people like her, anytime. She feels that the daughter is rejecting her, to gain acceptance in the new world, of which they are now a part. Immigrants may feel like outsiders, who have to gain acceptance to become a part of their new world. To gain acceptance they will have to give up their own individuality. This gives them a feeling of insecurity and helplessness. At times they may experience a feeling of despair about not having any control over their life and family. Immigrants give up everything to move to another country, so for them, there is a lot at stake. They have nothing to return to if things do not work out, in their new home. This can have a profound effect on their lives because they have to adapt and be successful. Immigrants have to cope with many problems of adaptation. They have to adapt to a new culture that is usually very different from their own. They may have to learn a new language and about how to behave in their new country. They have to learn new skills, to find employment. In The Jade Peony, Choy (1995) highlights the problems faced by immigrants who have very limited knowledge of English and a different accent. They are mocked or ignored by many people and this can be very humiliating for a person, who is trying to adapt to life in a strange land.In The Jade Peony, the teacher Miss Doyle is a very helpful person. She is dedicated to helping her students to learn the English language. She works hard to build their fluency in English while developing their confidence. She tries to teach them values that help to build character. Miss Doyle comes across as a kind person who cares for her students. This shows that there always people who respect the immigrants as human beings and are willing to help them to create a new life, in their new home. In the Canadian Experience, by Clark, we can see how difficult it is for immigrants to make a career in their new country.