Özet:

The need to keep the role of the state in the economy at the possible level by reducing public spending is widely defended in today’s economic environments. With the reduction of public spending, the tax burden in the economy will also be reduced. In this case, the economic resources are defended to be used by the more productive private sector. As a result, a faster economic growth will be achieved. The economists who support Keynesian policies argue that economic growth can be achieved through public spending. Those who don’t support this opinion claim that the public sector will use the resources inefficiently. In addition, they point out that governments are more prone to charity spending that will increase their voting rates instead of long-term investments due to election concerns. This study, using annual economic growth and public spending data between 1990 and 2016, examined the relationship between economic growth and public spending in the G7 countries. In the study, the stagnation of the series was studied by CADF unit root test.  The panel integration relationship was studied by the Westerlund-Edgerton (2007) integration test, which took into account horizontal cutting dependency. The long-term equalization rates are determined by the AMG method. According to the study, the increase in public spending has increased economic growth.

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