Quantitative Economics and Management Studies
Vol. 3 No. 2 (2022)

Assessing Multiplier Effects of Public Expenditures on Economic Growth in Nepal: SVAR Model Analysis

Raghu Bir Bista (Department of Economics, Tribhuvan University, Kathmandu, Nepal)
Kiran Prasad Sankhi (Nepal Bank Limited, Kathamandu, Nepal)



Article Info

Publish Date
29 Apr 2022

Abstract

This paper assesses the multiplier effects of public expenditures on economic growth in Nepal, covering time series data sets of public expenditures and economic growth from 1974-75 to 2018-19 by using the SVAR model. As a result of the SVAR model, the multiplier effect of public expenditure, recurrent expenditure, and capital expenditure is positive for economic growth. In a result, the multiplier effect of recurrent expenditure is found to be more promising than capital expenditure for economic growth in the short run, but in the long run, it is lower. Similarly, the multiplier coefficient value of capital expenditure is lower in the short run. This is probably due to leakages in the economy, corruption and improper management of development funds, seasonal expenditure trends, and poor management of development projects. Therefore, the government should improve the efficiency of public expenditure and the ratio of capital expenditure and private investment to improve the higher multiplier variable in the long run.

Copyrights © 2022






Journal Info

Abbrev

qems

Publisher

Subject

Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Mathematics

Description

Journal of Quantitative Economics and Management Studies (QEMS) is an international peer-reviewed open-access journal dedicated to interchange for the results of high-quality research in all aspects of economics, management, business, finance, marketing, accounting. The journal publishes ...