Education and Economic Growth in NER States of India: A Panel Cointegration Analysis
DOI:
https://doi.org/10.1956/jge.v14i2.475Keywords:
unit root test, economic growth, panel cointegration, fully modified OLS (FM-OLS), dynamic OLS (DOLS)Abstract
The main purpose of this study is examines the long run relationship between social expenditures and economic growth in North-Eastern states of India. The long run impact of expenditures in social sector such as education, health and social welfare on economic growth is investigated by applying the Pedroni’s panel Cointegration using balanced panel data analysis of eight (8) North Eastern states over the period from 2000 to 2014. In this study empirical analysis suggest the existence of dynamic relationship among expenditures on education, health and social welfare and economic growth for all cases of eight sample states. The study concludes that expenditures in the social sector can affect economic growth. Such social expenditures enhance productivity by providing infrastructure, education, health and harmonizing social interests. Thus, expenditure composition can also play an important role in promoting economic growth in North-Eastern region.
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[2]. Baldacci, E., Clements, B., and Gupta, S. 2003. “Using fiscal Policy to Spur Growth.†Finance and Development, December, pp.28-31.
[3]. Barro, R.J. 1991. “Economic growth in a cross section of countries.†Quarterly Journal of Economics 106, pp. 407-444.
[4]. Baum, N.D and Lin, S. 1993. “The Differential Effects on Economic Growth of Government Expenditures on Education, Welfare, and Defense.†Journal of Economic Development 18, pp. 175-185.
[5]. C. Kao, “Spurious regression and residual-based tests for cointegration in panel data,†Journal of Econometrics, vol. 90, pp. 1–44, 1999.
[6]. C. Kao, and M. H. Chiang.“On the estimation and inference of a cointegrated regression in panel data,†Advances in Econometrics, vol.15, pp.179-222, 2000.
[7]. Carr,J 1989 “Government size and Economic growth: A New Framework and some evidence from Cross section and Time series data: Comment.†American Economic Review 79, pp.267- 271.
[8]. Chenery,H.B and M.Syrquin, 1975. “Patterns of development: 1950-1970.†Oxford University Press London.
[9]. Devarajan, S., Vinaya Swaroop, Heng-fu Zou, 1996. “The Composition of Public Sector and Economic Growth.†Journal of Monetary Economics 37 pp.313-344.
[10]. Diamond, J. 1989. “Government Expenditure and Economic Growth: An Empirical Investigation.†IMF Working Paper No. 89/45, Washington D.C.
[11]. Dickey, D.A and Fuller, W.A 1979. “Distribution of the Estimators for Autoregressive Time Series with a Unit Root.†Journal of the American Statistical Association 74, pp.427-431.
[12]. Fischer S. 1991. “Growth Macroeconomics and Development.†NBER Macroeconomic Annual 1991, vol. 6, The MIT Press.
[13]. Folster, S and Henrekson, M. 2001. “Growth Effects of Government Expenditure and Taxation in Rich Countries.†European Economic Review 50, no. 1,pp. 219-221
[14]. G. S.Maddala, and I. M. Kim, Unit Roots, Cointegration and Structural Change, Cambridge: Cambridge University Press, 1998.
[15]. G.S. Maddala, and S. Wu, “A comparative study of unit root tests with panel data and new simple test,†Oxford Bulletin of Economics and Statistics, Speccial issue, pp.631-652, 1999.
[16]. Ghaleb R. Joey 2000. “Social Spending Versus Social Investment: A Budgetary Analysis.†UNDP conference on Linking Economic Growth and Social Development in Lebanon. 11-13 January 2000, Beirut, Lebanon.
[17]. Granger, C. W. J. (1986). Developments in the study of cointegrated economics variables. Oxford Bulletin of Economics and Statistics, 48, pp.213–228.
[18]. Granger, C. W. J. (1988). Some recent developments in a concept of causality. Journal of Econometrics, 39,pp. 199–211.
[19]. Grier, K. and G. Tullock 1989. “An empirical analysis of cross-national economic growth, 1951-1980.†Journal of Monetary Economics 24, 259-276.
[20]. Hadri, “Testing for unit roots in heterogeneous panel data,†Econometrics Journal, vol. 3(2), pp. 148–161, 2000.
[21]. Im, K.S., M. H. Pesaran, and Y. Shin 2003. “Testing for Unit Roots in Heterogeneous Panels.†Journal of Econometrics 115, pp.53-74.
[22]. J. Breitung, ‘The local power of some unit root tests for panel data,†In: Baltagi B (ed) Nonstationary Panels, Panel Cointegration, and Dynamic panels, Advances in Econometrics, vol 15. Amsterdam: JAI, 2000, pp 161–178.
[23]. J. Gallin, “The long-run relationship between house prices and income: evidence from local housing markets,†Real Estate Economics, vol.34, pp.417-438, 2006.
[24]. J. Muellbauer, and R. Lattimore, “The consumption function: a theoretical and empirical overview,†In: Pesaran, H., Wickens, M. (Eds.), Handbook of Applied Econometrics, Blackwell, oxford vol. 1, 1995, pp. 221-311.
[25]. Johansen, S. 1988. “Statistical Analysis of Co integration Vectors.†Journal of Economic Dynamics and Control 12, pp.231-54.
[26]. Johansen, S. 1995. “Likelihood-Based Inference in Co integrated Vector Autoregressive Models.†Oxford University Press, Oxford.
[27]. Johansen, S. and K. Juselius 1990. “Maximum Likelihood Estimation and Inference on Co integration with Application to the Demand for Money.†Oxford Bulletin of Economics and Statistics 52, pp.169-210.
[28]. K. S. Im, M. H. Pesaran, and Y. Shin, “Testing for unit roots in heterogeneous panels,†Journal of Econometrics, vol. 115 (1), pp. 53–74, 2003.
[29]. Khalifa.Yousif Alyousif 2001. ''Does Government Expenditure Inhibit or Promote Economic Growth: Some Empirical Evidence from Saudi Arabia.†Indian Economic Journal 48. no. 2, pp.92-96.
[30]. Khan Habibullah, Khalid M. Ahmed, 1999. “Social Expenditures and Economic Growth: Evidence from Japan using Co integration and Causality Testsâ€. Singapore Economic Review 44, no.2, pp.36-55.
[31]. Kormendi, R.C and P.G Meguire 1985. Macroeconomic determinants of growth: Cross country evidence, Journal of Monetary Economics 16,pp.141-164.
[32]. Landau, D. 1983 “Government Expenditure and Economic Growth: A Cross Country Study “Southern Economic Journal 49, pp. 783-792.
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Published
08.11.2018
How to Cite
Jaman, M. S. (2018) “Education and Economic Growth in NER States of India: A Panel Cointegration Analysis”, Journal of Global Economy, 14(2), pp. 89–105. doi: 10.1956/jge.v14i2.475.
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