Analysis of Philippine Government Expenditure on Education and GDP Growth

The paper investigates the relationship between government expenditure on education (GEE) and the gross domestic product (GDP) in the Philippines using time series data from 2000 to 2021. The study seeks to examine the nature and direction of cointegration between government expenditure on education and economic growth to substantiate the theory of Keynesian’s hypothesis and Wagner’s law that public spending generates national income and national income drives government expenditures, respectively. The econometric method employed was the cointegration using Engle-Granger and Phillips-Ouliaris tests and error correction technique. Based on the Engle-Granger and Phillips-Ouliaris tests, results revealed that gross domestic product and government expenditure on education are cointegrated. In estimating the long-run and short-run Run Models, both the long-run model and the short-run model are appropriate for GDP and GEE.