THE NEXUS BETWEEN ECONOMIC GROWTH AND GOVERNMENT EXPENDITURE IN MYANMAR

This paper attempts to study the nexus between economic growth and government expenditure of Myanmar. The data is applied from World Bank’s database and it is annual data from 2000 to 2016. The Engle and Granger two steps method is employed to test cointegration and Error Correction Model. To trace the causality between two variables, Granger causality test is employed to investigate. The empirical findings present that both variables are cointegrated in long-run. Furthermore, in the result of Granger causality, there has unidirectional causality. This means that government expenditure does cause economic growth. In the interpretation, when government expends more money, the economy leads to growth in long-run. Keyword: Government Expenditure, Economic growth, Unit root, Cointegration, Error Correction Model and Causality