Does the Effectiveness of Budget Deficit Vary between Welfare and Non-Welfare Countries?

Government intervention is imperative in the mixed economic system due to market failures, imperfection, pure public goods, and economic externalities. To this end, we measure the comparative impact of budget deficits on economic growth, incorporating the moderating role of quality of governance (QO...

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Published in:Sustainability (Switzerland)
Main Author: Musa K.; Ali N.; Said J.; Ghapar F.; Mariev O.; Mohamed N.; Tahir H.M.
Format: Article
Language:English
Published: MDPI 2023
Online Access:https://www.scopus.com/inward/record.uri?eid=2-s2.0-85149960742&doi=10.3390%2fsu15053901&partnerID=40&md5=46349249e59f667c4dddc71bfe495d18
id 2-s2.0-85149960742
spelling 2-s2.0-85149960742
Musa K.; Ali N.; Said J.; Ghapar F.; Mariev O.; Mohamed N.; Tahir H.M.
Does the Effectiveness of Budget Deficit Vary between Welfare and Non-Welfare Countries?
2023
Sustainability (Switzerland)
15
5
10.3390/su15053901
https://www.scopus.com/inward/record.uri?eid=2-s2.0-85149960742&doi=10.3390%2fsu15053901&partnerID=40&md5=46349249e59f667c4dddc71bfe495d18
Government intervention is imperative in the mixed economic system due to market failures, imperfection, pure public goods, and economic externalities. To this end, we measure the comparative impact of budget deficits on economic growth, incorporating the moderating role of quality of governance (QOG) for welfare and non-welfare countries. We apply a newly developed econometric model, namely Panel Quantile Regression via Moment Conditions, considering the scale and location effect due to high heterogeneity in our panel time series data over 1990–2020. Our empirical investigation shows that the budget deficit promotes economic growth sustainability in the overall sample countries. The comparative analysis confirms that budget deficit promotes economic growth for welfare countries while it impends for non-welfare countries. Furthermore, QOG augments sustainable economic growth in different economic circumstances in welfare countries and non-welfare countries. Finally, the results also demonstrate that the QOG plays a supportive role in the nexus between budget deficit and economic growth in the full sample countries. The findings indicate that the effectiveness of the budget deficit varies across welfare and non-welfare countries. In general, QOG promotes economic growth, but its stringent rules and restrictions somewhat slow down the wheel of the growth process. We provide several policy implications. © 2023 by the authors.
MDPI
20711050
English
Article
All Open Access; Gold Open Access
author Musa K.; Ali N.; Said J.; Ghapar F.; Mariev O.; Mohamed N.; Tahir H.M.
spellingShingle Musa K.; Ali N.; Said J.; Ghapar F.; Mariev O.; Mohamed N.; Tahir H.M.
Does the Effectiveness of Budget Deficit Vary between Welfare and Non-Welfare Countries?
author_facet Musa K.; Ali N.; Said J.; Ghapar F.; Mariev O.; Mohamed N.; Tahir H.M.
author_sort Musa K.; Ali N.; Said J.; Ghapar F.; Mariev O.; Mohamed N.; Tahir H.M.
title Does the Effectiveness of Budget Deficit Vary between Welfare and Non-Welfare Countries?
title_short Does the Effectiveness of Budget Deficit Vary between Welfare and Non-Welfare Countries?
title_full Does the Effectiveness of Budget Deficit Vary between Welfare and Non-Welfare Countries?
title_fullStr Does the Effectiveness of Budget Deficit Vary between Welfare and Non-Welfare Countries?
title_full_unstemmed Does the Effectiveness of Budget Deficit Vary between Welfare and Non-Welfare Countries?
title_sort Does the Effectiveness of Budget Deficit Vary between Welfare and Non-Welfare Countries?
publishDate 2023
container_title Sustainability (Switzerland)
container_volume 15
container_issue 5
doi_str_mv 10.3390/su15053901
url https://www.scopus.com/inward/record.uri?eid=2-s2.0-85149960742&doi=10.3390%2fsu15053901&partnerID=40&md5=46349249e59f667c4dddc71bfe495d18
description Government intervention is imperative in the mixed economic system due to market failures, imperfection, pure public goods, and economic externalities. To this end, we measure the comparative impact of budget deficits on economic growth, incorporating the moderating role of quality of governance (QOG) for welfare and non-welfare countries. We apply a newly developed econometric model, namely Panel Quantile Regression via Moment Conditions, considering the scale and location effect due to high heterogeneity in our panel time series data over 1990–2020. Our empirical investigation shows that the budget deficit promotes economic growth sustainability in the overall sample countries. The comparative analysis confirms that budget deficit promotes economic growth for welfare countries while it impends for non-welfare countries. Furthermore, QOG augments sustainable economic growth in different economic circumstances in welfare countries and non-welfare countries. Finally, the results also demonstrate that the QOG plays a supportive role in the nexus between budget deficit and economic growth in the full sample countries. The findings indicate that the effectiveness of the budget deficit varies across welfare and non-welfare countries. In general, QOG promotes economic growth, but its stringent rules and restrictions somewhat slow down the wheel of the growth process. We provide several policy implications. © 2023 by the authors.
publisher MDPI
issn 20711050
language English
format Article
accesstype All Open Access; Gold Open Access
record_format scopus
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