The Effect of Size of Government on Human Development: By using panel Data Approach

اقتصاد پولی مالی

Article 6, Volume 19, Issue 3, January 2013   

Document Type: پژوهشی

DOI: 10.22067/pm.v19i3.28558

Authors

Shamsollah Shirinbakhsh^* ; Amini Toktam; Javad Harati

Abstract

In this paper the effect of government size on social welfare (HDI) with using of
time series data in period 1990-2006 in 52 countries as well as, a panel model is
investigated.
Human development index (HDI) is calculated with average of three indices: Life
Expectancy Index, Education Index and GDP Index. In addition, two variables of
government consumption expenditures as a share of GDP and government
investment expenditures as a share of GDP for calculating variable of size of
government are used. The impact government consumption and investment
expenditures on the HDI with using of two separate equations and a panel model
with fixed effects are estimated.
Results suggested that government consumption and investment expenditure has a
positive and significant effect on the HDI, but it reduced over time. In addition, the
impact of a change in government investment expenditures takes longer to be fully
realized than does the impact of a change in government consumption expenditures,
such that half of the full impact of a change in government consumptionexpenditures on HDI is realized within 2.06 years, and half of the full impact of a
change in government investment expenditures is realized within 2.15 years.

Keywords

Social Welfare; Human Development Index; Government Consumption Expenditure; Government Investment Expenditure; Panel Date Model