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2016 | 46 | 176-188
Article title

Budget Deficit and Economic Growth in Sri Lanka: An Econometric Dynamic Analysis

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EN
Abstracts
EN
Budget deficit is a debating word in developing countries; it maintains a relationship with economic growth of countries in different aspects. The objective of this study was to test the dynamic relationship between the budget deficit and the economic growth of Sri Lanka using annual time series data from 1959 to 2013.To test this objective, the budget deficit of Sri Lanka was used as main independent variable and the gross domestic product in constant price was utilized as dependent variable. The exports earnings, exchange rate, inflation rate were used supportive independent variables of this study. The Johansen cointegration technique and Vector Error Correction Model were employed to test the long and short - run dynamic relationship between the budget deficit and the economic growth of Sri Lanka. This study found that all variables were cointegrated at 1st difference form. In the meantime the budget deficit and economic growth of Sri Lanka had preserved a long- run dynamic relationship during the study period but no short- run dynamic relationship. In addition, the budget deficit had positive relationship with economic growth of Sri Lanka.
Year
Volume
46
Pages
176-188
Physical description
Contributors
References
  • [1] A.L. Mohamed Aslam, Tax revenue and government expenditure in Sri Lanka: An econometric AEG testing approach, International Letters of Social and Humanistic Sciences, 66 (2016) 31-37.
  • [2] A.L. Mohamed Aslam, A case study of cointegration relationship between tax revenue and foreign direct investment: evidence from Sri Lanka, 2nd International Symposium, FIA, South Eastern University of Sri Lanka, (2015) 241-251.
  • [3] Central Bank Annual Report, Sri Lanka, 2013.
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  • [8] N. Ahmad, The role of Budget Deficit in the Economic Growth of Pakistan, Global Journal of Management and Business Research Economics and Commerce, 13(5) (2013).
  • [9] N. H. A. Rahaman, the relationship between budget deficit and economic growth from Malaysia’s perspective: An ARDL approach, International Conference on Economics, Business Innovation, 38 (2012) 54-58.
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  • [12] S.I. Al- Khedair, The impact of the budget deficit on key macroeconomic variables in the major industrial countries, Florida Atlantic University, (1996).
Document Type
article
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YADDA identifier
bwmeta1.element.psjd-5ebfae41-545f-4271-b43f-cc9f670dd368
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