Public expenditure and growth: the Indian case*

The paper deals with the relationship between public spending and growth as well dynamics of ratio debt to GDP. authors show that a composition favors productive expenditures, is, those direct positive effect on economy's long-run rate growth, can determine situation in which GDP is stable, even though government runs primary deficits. We test our theoretical results by considering Indian case. Our empirical analysis substantially supports idea economy public-debt are contingent having sector expenditures.