Abstract:

This paper assess how the government expenditures affected economic growth in developed, developing and underdeveloped countries by using the unbalanced panel approach for the period of 1980-2012. The results indicate that government spending has positive significant impact on economic growth in fixed and random effect models for underdeveloped countries, while for developed countries there is a significant negative relationship between government expenditure and economic growth in both fixed and random effect models. For the developing countries government spending has negative significant impact on economic growth in case of fixed effect model, while for the random effect model, there is positive and insignificant relationship of government spending to economic growth.   

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