Impact of Government Expenditures on Economic Growth in Rwanda

The study was carried out to assess the impact of government expenditures on economic growth of Rwanda, specifically capital and recurrent expenditures using annual data from 1990-2017. It adopted the quantitative experimental research design and used secondary data which sourced from updated macro-economic framework public dataset from Ministry of Finance and Economic Planning and World Development Indicators for Rwanda, from World Bank website. The data were processed and analyzed using Eviews version 7. The Philips-Perron stationarity, multivariate Johansen cointegration tests for the long run relationship were carried out before estimating the OLS long run equation. The VAR model was also employed to assess the impact of government expenditures in general, capital and recurrent expenditure in particular on economic growth. The error correction model helped to evaluate the short run relationship between the variables. The study found a significant positive short and long run relationship between recurrent expenditure and the economic growth while for capital expenditure, there is a significant long run and no short run relationship found.