Public Expenditure and Economic Growth in Oil Industries: Dynamics Relationship

Abstract

The relationship between trends in public expenditure and economic performance remains controversial and controversial at the level of economic theory and empirical studies in both developing and developed countries. In the oil countries, public spending plays multiple roles in economic activity, the most important being the engine of economic growth and stability, and a tool to distribute the revenues of the oil supplier to various segments of society, as well as being the channel between the fluctuations of oil prices and the direction of the economic cycle in these countries. This paper attempts to uncover the dynamic relationship between government spending and economic growth, expressed in GDP at constant prices, in the Iraqi economy during the period (1990- 2015), using the model of joint integration and the rationale of granger and using annual and quarterly data. The results revealed that there is a long-term balance between these variables, and that government spending has an influential role in economic growth in the short and long term. Finally, between the Granger test and the trend of causality from government spending towards GDP, Which depends on the oil resource in moving the economy through the channel of government spending both current and investment