Assessment of the Impact of Republic of Armenia State Budget Expenditures on Economic Growth

The current article is devoted to analysing the state budget expenditures of the Republic of Armenia regarding its impact on economic growth rates. The object of the study is the expenditures of the state budget of the Republic of Armenia. The study aims to analyze and assess the impact of the state budget expenditures on the economic growth rate in the country. The main hypothesis of the study is that inefficient spending of budgetary funds not only does not stimulate but, in many ways, is a significant factor of the slowdown in economic growth in Armenia. The methodological bases of the study are the provisions of modern economic theory regarding the impact of government spending on economic growth rates. The study used methods of qualitative, statistical and econometric analysis of indicators, followed by the identification of cause-and-effect relationships and impact assessment. Data on the expenditures of the state budget of Armenia was taken as the informative basis of the study. The study of the scientific literature allowed to identify key theoretical approaches regarding the impact of the state budget expenditures on the economic growth rates in the country. The study examined in detail the expenditure articles of the state budget of Armenia, highlighting positive and negative factors influencing economic growth. In this regard, a vector autoregression model was built to identify the impact of spending on economic growth in the country. The result of the study was the conclusion that the impact of the state budget expenditures on the economic growth rates has a long-term negative nature in Armenia. The analysis of both the structure of state budget expenditures and the constructed vector autoregression model proves that the lack of an expenditure policy regarding the development of human capital, infrastructure and other components of public spending is one of the significant factors of the slowdown in economic growth in Armenia.