Economic Growth and Government Expenditure in ASEAN Countries: A Threshold Approach

Abstract

This study examines the effect of government spending on the economic growth of ASEAN countries between 2000 and 2020, using estimates for panel data. The results show that government spending responds positively to the economic growth of ASEAN countries. Intriguingly, this study finds a threshold level for government spending that reduces economic growth if governments let it exceeds 26.82 percent of GDP. Therefore, this study recommends that ASEAN governments need to pursue targeted and rational spending policies.