Connectedness Between Government Expenditure and Economic Growth in the UK: Evidence from Wavelet Approach

Abstract This study aims to provide a vigorous vision of the connectedness of government health and education investments as a share of government expenditure with economic growth given political and/or economic risk through wavelet methodology. The empirical analyses are carried out through multiple and partial wavelet coherence techniques employing quarterly data from 1984Q1 and 2021Q4. To the best of the author’s knowledge, there is no study in related literature investigating the connectedness between human capital investment of government and economic growth considering the level of political and economic risk within the country through wavelet tools. Therefore, the main contribution of this study is to fill this gap both in academic literature and the policy arena. According to the empirical outcomes, the strongest connectedness exists between economic growth and government health investment until 2013. However, from 2018, it has been observed that economic risk and economic growth connectedness are stronger in the short and medium run, as in the case of the UK.