Relationship between GDP per capita, institutional quality and public spending.

Abstract

The method applied in this investigation was the hypothetical deductive method, since it was based on the determination of the variables GDP per capita, Institutional Quality and Public Expenditure, under the hypothesis that the Public Expenditure and Institutional Quality have a significant impact on the increase in GDP per capita. The relationship between GDP per capita, institutional quality and public expenditure was determined through a data panel of twenty Latin American countries, where GDP per capita represented the dependent variable, as well as Public Expenditure and Institutional Quality were its main explanatory variables of the model, collected four-monthly in the period from 1992 to 2007.