THE IMPACT OF GOVERNMENT SPENDING ON EMPLOYMENT: EVIDENCE FROM UZBEKISTAN USING AN ARDL–ECM APPROACH
DOI:
https://doi.org/10.55640/Keywords:
Government spending; employment; fiscal policy; Uzbekistan; ARDL bounds testing; Error correction model.Abstract
This study examines the effect of government spending on employment rate in Uzbekistan with data for the period 1993–2024. The analysis applies Autoregressive Distributed Lag (ARDL) bounds testing for the determination of long-run correlation over the research variables: employment rate, government spending, population and real GDP. The analysis was implemented using the R software. The unit root tests show that all the variables were integrated in the first order and that the ARDL framework can be applied. Results of the bounds test show constant relationships among the variables during the long run period. Long-run estimates indicate that government spending positively and significantly affects employment. Short-run dynamics are examined usind error correction models (ECM). The autocorrelation-consistent (HAC) standart errors were employed to address heteroskedasticity and autocorrelation. ECM results show that changes in government spending have a positive direct effect on employment. The error correction term is negative and statistically significant which suggests a fast response towards equilibrium (long-run adjustment). The estimated model has been validated and robust by diagnostic and robustness tests. The results can indicate from the analysis of the data that in general, government spending serves as a powerful policy instrument to stimulate employment Growth within Uzbekistan, especially long-run.
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