THE RELATIONSHIP BETWEEN GOVERNMENT EXPENDITURE AND ECONOMIC GROWTH IN JORDAN AN ECONOMETRIC STUDY DURING THE PERIOD OF 1990-2018

This study aims to determine the causal relationship between government expenditure and economic growth which is measured by real gross domestic product during the period (1990-2018) in Jordan. Therefore, for the purpose of achieving the aim of this study, a descriptive statistical approach was used to analyze and develop both the government expenditure and gross domestic product in Jordan. Also, the econometric analysis was adopted to determine the relationship between government expenditure and economic growth through a set of tests. Where the results of the Augmented Dickey-Fuller Test (ADF) showed that the variables of the study are nonstationary at level, however they become stationary after taking the first difference. As well as, selecting the causality using the Granger Causality Test to prove the validity of Wagner's law on the Jordanian economy. However, the result of the co-integration test indicated that there are two vectors integration approaches. As for the dynamic least squares test, it pointed out that the government expenditure has an important and positive impact on increasing the gross domestic product in the long run.