Date of Award

5-2016

Document Type

Thesis

Degree Name

Master of Arts (MA)

Legacy Department

Economics

Committee Member

Dr. Chungsang Lam, Committee Chair

Committee Member

Dr. Matthew Lewis

Committee Member

Dr. Scott Templeton

Abstract

Education is important for a country's economic growth. And public expenditure on education is important for improving education. Therefore, public expenditure on education will influence economic growth in a country. However, it is also possible that when the economy grows, maybe we have more public expenditure on education because government wants to improve education. Therefore, the relationship between public expenditure on education and economic growth needs to be discussed. This paper studies the relationship between public expenditure on education and economic growth in China. Firstly, I use regression analysis to study how the public expenditure on education influences the GDP. I find that the contribution of public expenditure on education is significant and high. It means that if government improve public expenditure on education, maybe it is helpful for economic growth. Then I consider the lag effect and the effect of GDP on public expenditure on education. Then I do the unit root test and I find that the data is stationary after second order difference. Finally, I do the Granger causality test, and I find that GDP Granger causes public expenditure on education in lag 1. I do not find that public expenditure on education Granger causes GDP in lag 1. I also do not find that Granger causality between public expenditure on education and GDP in lag 2, 3, 4, 5, 6.

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