The Paradox of Public Spending in Angola: An Analysis a Keynesian Perspective
DOI:
https://doi.org/10.54580/R0801.11Keywords:
GDP Growth, Diversification, Public Expenditure, Angola, VARAbstract
This study analyzes the determinants of economic growth in Angola, with a particular focus on the composition of public spending and its interaction with key macroeconomic variables. Methodologically, the research uses a Vector Autoregressive (VAR) model as the main empirical strategy, allowing the capture of dynamic interdependencies between Gross Domestic Product (GDP), different types of public spending, the exchange rate, the price of oil, and tax revenue. The variables were transformed into natural logarithms and tested for stationarity using the augmented Dickey-Fuller test and subsequently differentiated to ensure adequate time series properties. The results reveal that the effects of public spending on economic growth vary significantly depending on its composition. Public investment has the most robust positive impact, while spending on wages and pensions has moderate effects, and spending on goods and services demonstrates lower economic efficiency. Additionally, the price of oil emerges as a determining variable, reinforcing the external vulnerability of the Angolan economy. The results suggest that the sustainability of economic growth depends not only on the volume of public spending, but above all on its composition, making it crucial to prioritize spending with a greater multiplier effect
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