engleski

CAUSALITY BETWEEN STATE AID AND GDP IN EUROPEAN COUNTRIES

The connection between state aid expenditures and economic growth in economic literature was never confirmed. In this paper we explore connection between state aid expenditures for horizontal and sectoral purposes and GDP using Granger causality test on panel data set. Panel data set consists of ten EU member states in period from 2000 to 2011. Our results suggest that the changes in GDP will create changes in horizontal aid but changes in horizontal aid will not create changes in GDP. Sectoral aid appears to cause changes in GDP but this connection remains unexplained due size of sectoral aid expenditures and political decision to reduce share of sectoral aid in total state aid.

state aid, GDP, EU member states, panel data, Granger causality

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