EuroEconomica, Vol 37, No 3 (2018)

Abstract

This study empirically examines the determinants of government expenditure in South Africa by using annual data for the period from 1970 to 2016 and provides an overview of the South African government expenditure. Results from the Johansen-Juselius cointegration test indicate that that there is a long-run relationship between government expenditure and its determinants. The error correction model results indicate that urbanisation rate, national income, poverty rate and the wage rate significantly influence the size of government expenditure. Therefore, the study recommend that government create job opportunities, increase its expenditure in developing rural areas, and find ways to manage the public sector wage bill. The study concludes that population growth, trade openness and inflation, are not important in determining government expenditure in South Africa.