Advances and Applications in Statistics
Volume 55, Issue 1, Pages 77 - 103
(March 2019) http://dx.doi.org/10.17654/AS055010077 |
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RELATIONSHIP BETWEEN GOVERNMENT EXPENDITURE ON EDUCATION AND GDP PER CAPITA IN PAKISTAN: AN ARDL APPROACH TO COINTEGRATION
Aideed Bashir and Abeera Amir
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Abstract: Education is one of the most crucial factors of economic development, and there is an agreement among policymakers that countries in which quality education is accessible to all do better. Pakistan is among the nations where the level of illiteracy is at its highest which requires dire attention. This study is designed to investigate the long and short run nexus among public expenditure on education and GDP per capita in Pakistan utilizing annual time series data for the period 1971 to 2017. This study is based on the Auto-Regressive Distributive Lag (ARDL) approach that has been proposed by Mohammad Hashem Pesaran. Short term cointegration among public expenditure on education and GDP per capita in Pakistan has been found in the study. The results of the study also confirm the long term positive significant influence of public expenditure on education on GDP per capita in Pakistan. Furthermore, the coefficient of the estimated error correction term indicates that the GDP per capita deviation from the equilibrium level would be rectified by about 11% each year. On the basis of the findings, this study recommends reduction of poverty and macroeconomic in stability. Policy action focusing on spending more on education and enhancing economic growth is of paramount importance. |
Keywords and phrases: auto-regressive distributive lag (ARDL), public expenditure, GDP per capita, Pakistan.
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