Government spending and economic growth: econometric evidence from South Eastern Europe (SEE

Abstract. This paper provides further evidence on the relationship between economic growth and government spending. For the first time two different panel data methodologies have been applied to seven transition economies in the South Eastern Europe (SEE), generating significant results which, if considered, may enhance the economic performance of the countries in the region. More specifically, the evidence generated indicate that four out of the five variables used in the estimation i.e. government spending on capital formation, development assistance, private investment and trade-openness all have positive and significant effect on economic growth. Population growth in contrast, is found to be statistically insignificant