Long- and short-run relationship between government spending and economic growth of Pakistan

Khurram Shehzad and Hafiz Adnan Munir

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The tenacity to do this work is to discover the long term and short-run relationship between government spending (defence spending and development expenditure) and economic growth. To this end, we use the Auto-Regressive Distributed Lag (ARDL) model on sample time-series over 1980-2015. The findings show that positive and significant relation prevails concerning long-term and short-term relationship between the Pakistan government's defence spending and economic growth. Further, outcomes illuminate that there is also a positive and significant relationship that prevails between the development spending by the government and the economic growth in both the long term and the short run. 
Keywords: Defence spending, ARDL, economic growth, development spending.