Impact of Government Spending on Economic Growth in Vietnam: Linearity or Non-Linearity?

Abstract

The relationship between fiscal power and economic growth is of significant interest from both theoretical and empirical perspectives. Previous findings based on frequentist models have been inconsistent, resulting in low accuracy. This study examines both the linear and non-linear relationships between government spending and economic growth using a time-series sample from Vietnam spanning 1986 to 2019. By employing Bayesian mixed-effects regressions, the study reveals a linear, monotonic connection between these two factors. The results offer a robust and reliable foundation for long-term fiscal policy decision-making in Vietnam aimed at achieving sustainable economic growth.