The growth of public expenditure in Kenya exploring the causes 1980 2012

Abstract

What explains the growth of public expenditure in Kenya? This study estimates the causes of growth of public expenditure using annual time series data for the period 1980 to 2012. In this study we examined 6 causes of growth of public expenditure in Kenya namely population, foreign Aid, inflation, Gr oss domestic product, free primary education and coalition government. The data obtained on these variables was subjected to ordinary least Squares and carried out co - integration and stationary tests. The results of the study revealed that Population, GDP, free primary education and Coalition government were integrated with Public Expenditure in Kenya. This means that there is a long run relationship between these variables and public expenditure. The study also showed that population and GDP had a positive relationship with public Expenditure growth while coalition government and free primary education had a negative effect on public expenditure growth in Kenya. Foreign aid and inflation were insignificant in determining the growth of public expenditure. Th is shows that population, GDP, free primary education and coalition government were the causes of growth of public expenditure in Kenya. The study concluded that for Kenya government to manage its expenditure sustainably there is need for the government to undertake proper fiscal policies and policies geared towards management of population and Free primary education.