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2019•ZENITH International Journal of Multidisciplinary ResearchRequires access

Education expenditure and economic growth: A causality analysis for India

Swati Upveja, Swati Shastri

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Abstract

This paper focuses on the long-run relationship and causality between government expenditure in education and economic growth in Indian economy for the time of 1980–2017. To test the causality vector error correction modelling (VECM) is applied. Findings from the cointegration test (Johansen) show that economic growth (GDP PC) is positively cointegrated with selected variables namely gross fixed capital formation (GCF) and government expenditure on education (EDU). The results of causality show that education expenditure granger causes GDP growth. Furthermore, this study has proven that education such as education variable plays an important role in influencing economic growth in India.

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What this paper is about

This paper focuses on the long-run relationship and causality between government expenditure in education and economic growth in Indian economy for the time of 1980–2017. To test the causality vector error correction modelling (VECM) is applied. Findings from the cointegration test (Johansen) show that economic growth (GDP PC) is positively cointegrated with selected variables namely gross fixed capital formation (GCF) and government expenditure on education (EDU). The results of causality show that education expenditure granger causes GDP growth. Furthermore, this study has proven that education such as education variable plays an important role in influencing economic growth in India.

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Available abstract

This paper focuses on the long-run relationship and causality between government expenditure in education and economic growth in Indian economy for the time of 1980–2017. To test the causality vector error correction modelling (VECM) is applied. Findings from the cointegration test (Johansen) show that economic growth (GDP PC) is positively cointegrated with selected variables namely gross fixed capital formation (GCF) and government expenditure on education (EDU). The results of causality show that education expenditure granger causes GDP growth. Furthermore, this study has proven that education such as education variable plays an important role in influencing economic growth in India.

Key concepts: Cointegration, Economics, Causality (physics), Government expenditure, Johansen test, Granger causality, Error correction model, Gross fixed capital formation

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