Causality Between Government Expenditures and National Output in Uzbekistan

Abstract

This article investigates the relationship between government expenditures and national output in Uzbekistan by estimating two vector autoregression (VAR ) models, performing impulse response analysis and testing for Granger causality over the period 1996–2011. The results indicate that there is strong Granger causality from economic growth to the growth rates of total and disaggregated government expenditures, but reverse causality is only weakly, if at all, significant. This suggests that over the sample period a growing share of government expenditures would not have contributed to economic growth in Uzbekistan, most likely due to inefficiency. Accordingly, the Uzbek government should str..