Acta Universitatis Danubius. Œconomica, Vol 13, No 5 (2017)

The impact of Public Expenditure on Economic Growth of Kosovo

Driton Balaj, Lirim Lani

Abstract


The aim of the paper is to identify the impact of public expenditure on economic growth of Kosovo over the period 2000-2016.

The structure of the econometric model is built by two economic theories, Wagner and Keynesian, where these two economic concepts support the results of the paper, that public expenditure and economic growth have a positive relation, but public expenditure does not have a direct impact on economic growth, but can have a stimulate effect on the economic growth process. The results of the econometric model showed that none of the public expenditure categories in Kosovo had any impact on economic growth of Kosovo over the period 2000-2016. The general conclusion is that public expenditure in Kosovo has been characterized by an unproductive public expedition, for the period 2000-2016, the effect of public expenditure on economic growth has not had the necessary and reasonable impact on achieving the economic target in Kosovo. The findings of the paper can be used by Kosovo's own government to orient the fiscal policies in Kosovo. The study seeks to contribute to the provision of an effective public expenditure structure in Kosovo, with particular emphasis on the best categorization of their impact on Kosovo's economic growth.


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