The Government Expenditure and Crowding-Out Effect on Private Sector

Authors

Haneen Elkusheh, Jordanian Ministry of Finance, Directorate of Public Debt, Department of Public Debt OperationsFollow
Lama aburokbehFollow

Abstract

This study aims at measuring the impact of government expenditure (current and capital) on credit granted to the private sector in Jordan during the period (2002-2021). This study is based on theoretical, descriptive and econometrics analysis using Vector Error Correction Method (VECM) methodology. The study aims at studying the impact of independent variables (capital expenditures, military expenditures, expenditure on public debt interest, and compensation of employees) on the dependent variable of credit granted to the private sector. The VECM methodology was used. The study found a long-term inverse relationship between (capital expenditures, and expenditure on public debt interest) towards credit granted to the private sector. It also showed a long-term positive relationship between (compensation of employees, and military expenditures) towards the credit granted to the private sector.

Recommended Citation

Elkusheh, Haneen and aburokbeh, Lama (2022) "The Government Expenditure and Crowding-Out Effect on Private Sector," Al-Balqa Journal for Research and Studies البلقاء للبحوث والدراسات: Vol. 25: Iss. 1, Article 8.
Available at: https://digitalcommons.aaru.edu.jo/albalqa/vol25/iss1/8