AFRICAN JOURNAL OF ECONOMICS AND FINANCIAL ISSUES

This article examines the impact of public spending on economic growth in Morocco over the period 1999–2019. Employing an Autoregressive Distributed Lag (ARDL) model, the study investigates the relationship between real GDP growth and key variables, including public expenditures, the employed active population, inflation, and the economy’s openness rate. The findings indicate a positive long-term effect of public spending on economic growth, with a 1% increase in real public spending associated with a 0.3% rise in real GDP. This result supports the Keynesian perspective, which highlights government spending as a driver of economic activity. However, the analysis also reveals a negative impact of public investment on growth, pointing to potential inefficiencies or crowding-out effects on private sector activity. Furthermore, the study explores the concept of an optimal level of public spending, drawing on the Rahn curve, and finds that Morocco’s public spending levels typically exceed the range deemed optimal for maximizing growth. These results emphasize that while public spending can enhance economic growth, its composition and efficiency are critical determinants of its effectiveness. The research contributes to the ongoing debate on the role of government intervention in the economy and provides policymakers with insights into optimizing public expenditure to foster sustainable economic development in Morocco.

Keywords: economic growth, public expenditures, public investment, ARDL modelling
JEL classification: E01, E22, H50, H54, O40