Empirical analysis of the effects of public expenditures on the economic growth
Empirical analysis of the effects of public expenditures on the economic growth

Summary/Abstract: Public expenditures represent spending of funds by the State and other public and private bodies to finance the supply of public goods, but also to achieve other goals of economic and social policy. They represent public expenditure and as such category with private (household) consumption and the investment components of the total consumption in an economy. The volume of the public spending, as a rule, have to move within the amount of allocated funds for this purpose, i.e., within the amount of public revenues in the economy. Modern fiscal theory does not accept the view that public expenditures are good only when they are in a small amount, especially thinking that public expenditures are only a burden of the economy. Rather generally accepted view is that public expenditures are useful for the execution of the functions of the state, but with them, you can achieve certain economic and social goals. That is why when it comes to public expenditure as a financial category, it is especially important if they are productive, not what is their scope, large or small.The level of public expenditure, in particular the trend of growth and their impact on economic growth are analyzed in this paper. Many empirical studies confirm the positive effect of increasing public expenditure on economic growth, but confirm that it depends on the structure and types of public expenditures. Empirical analysis refers to the trend of public expenditure in the Republic of Macedonia in the period from 1997 to 2010. To determine the impact of the different types of public expenditure on economic growth, multiple regression analysis is used.The result confirms the weak influence of the public expenditure on the economic growth in Republic of Macedonia, especially if it is unproductive expenditures. Significant impact confirms the productive expenditure category as capital investments.

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