Impact of Government Expenditure on Economic Growth of Pakistan

Abstract

This study explores the effects of government spending on Pakistan's economic growth. From 1980 through 2020, the study employed annual time series data. The study applied ADF Test to check data stationary. The study also applied Ordinary Least Square (OLS) method to estimate the association between gross domestic product and Government Expenditure, Inflation and GDP per capita. The results of OLS method show there is positive and significant impact of Government expenditure and GDP per capita on economic growth. While, Inflation has negative and significant impact on economic growth. The study suggests that expansionary fiscal policy can be used by government to stimulate the economy during a recession.