PUBLIC SPENDING AND THE ECONOMIC GROWTH RATE IN THE EUROPEAN UNION COUNTRIES
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The aim of this study is to make an assessment of the relationship between the total amount of public spending and the economic growth rate. According to the study results, an increase in total amount of public spending (expressed as % of GDP) brings about a decrease in the real gross domestic product. An analysis of the public spending in selected EU countries in the period from 1996 to 2005, measured as its percentage of GDP, reveals its relationship with a change in real GDP value. The relationship is negative, which means that a 1% increase in public spending is accompanied by an average decrease in the real GDP growth rate by 0.151312%. The actual GDP growth rate differs from that estimated by the model by circa 0.13823%.
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