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This study examines the impact of government expenditure on economic growth in Vanuatu for the period 1981 to 2016. We first examined the effects of government expenditure on economic growth when government expenditure is financed by tax revenues, non-tax revenues, and budget deficit/surplus. Secondly, we examined the effects of government expenditure compositions on economic growth. Thirdly, we tested for weak exogeneity of fiscal factors on investment. We observed that fiscal factors and investment have causal effects on economic growth in Vanuatu. More specifically, government expenditure negatively influences long-run economic growth when financed by tax revenues, but positively influences long-run economic growth when financed by other sources such as non-tax revenues and budget surplus/deficit. We further noted that amongst expenditure compositions, expenditure on education, health, wages & salaries, agriculture, and interest payments individually has larger effects on the long-run economic growth than the remaining expenditure composition as a whole. [ABSTRACT FROM AUTHOR]

Unlike previous studies on causal relationships between government revenue and expenditures in China, this study takes into consideration structural breaks in the data by performing wavelet decomposition prior to testing for Granger causality between the fiscal components. The use of wavelet decomposition is motivated by economic theories, which suggest allowing for different budgetary considerations at different time horizons, as well as by the existence of special properties in the data in the form of unit roots and structural breaks. The results from the Granger causality test when using the wavelet-decomposed quarterly data over the period 1980–2015 indicate that government revenue Granger-causes government expenditure (tax-and-spend hypothesis) in the wavelet scales of two to four quarters. The results also show that bidirectional causality (fiscal synchronisation) exists in the wavelet scale of eight to sixteen quarters. Understanding the causal relationships between revenue and expenditure at different time scales is important for formulating relevant policy measures in order to maintain fiscal sustainability in China. [ABSTRACT FROM AUTHOR]

Theoretical developments, improved methodologies and more extensive data have helped generate a dramatic increase in the literature testing for the impact of government size and fiscal policy on economic growth in recent years. We review a range of the more recent evidence and examine (1) the consistency or robustness of the results, (2) how these results differ from the earlier literature and (3) their usefulness as a guide to policy reform in practice. We find that the last decade has produced more robust evidence and more plausible orders of magnitude on the impact of fiscal policy on growth. However, the value of this evidence remains limited as a basis for quantifying macro-economic responses to fiscal policy reform in practice. [ABSTRACT FROM AUTHOR]

This note examines the likely impact of increased government expenditure on education in Indonesia resulting from new policy initiatives since the year 2000. These initiatives were consolidated in 2003 following the enactment of a new 'Law on National Education System'. The effectiveness of this policy is questioned by comparing the expenditure and enrolment rates between Indonesia and other High Performing Asian Economies (HPAEs) - Singapore, Hong Kong, South Korea, Thailand and Malaysia from 2000 to 2007. Privatisation of educational institutions, not greater government involvement, has been the norm across most of the other HPAEs during the 2000s. Privatisation leads to improvements in the quality and cost of education. Enrolment rates indicate that the quality of education has not improved in Indonesia as compared to other HPAEs. Improvements in quality will become a particularly important issue for Indonesia as it continues to cope with the challenges brought about by China and India's unprecedented growth as labour-intensive manufacturing powerhouses. [ABSTRACT FROM AUTHOR]