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<p>This study empirically investigates the long-term relationship between education expenditures and economic growth in the context of USA from 1959 to 2021 using the Fractionally Cointegrated Vector Autoregressive (FCVAR) model. This sophisticated econometric analysis allows for in-depth investigation of the linkages and dynamics in this extended studied period often missed by other approaches such as the Error Correction Model or ARDL. The results reveal a significant persistence and long memory within the data, suggesting that the effects of sustained education funding on economic growth are not just substantial, but enduring. As a result, this article challenges the traditional short-term focus of fiscal policy regarding education expenditures, implying that growth is best supported by consistent and well-targeted educational investments. By addressing gaps in the literature, this research contributes to both academic debates and practical policymaking. It is crucial for policymakers as it challenges conventional short-term fiscal perspectives by providing compelling evidence of the long-term economic benefits of educational expenditures.</p>

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Fractional Long-Run Equilibrium of Education Expenditure and Economic Growth: The Case of the USA

  • 期刊论文

  • 发表日期：

    2025年3月25日

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  • Danai Diakodimitriou,
  • Theofanis Papageorgiou,
  • Alexandros Tsioutsios

摘要

This study empirically investigates the long-term relationship between education expenditures and economic growth in the context of USA from 1959 to 2021 using the Fractionally Cointegrated Vector Autoregressive (FCVAR) model. This sophisticated econometric analysis allows for in-depth investigation of the linkages and dynamics in this extended studied period often missed by other approaches such as the Error Correction Model or ARDL. The results reveal a significant persistence and long memory within the data, suggesting that the effects of sustained education funding on economic growth are not just substantial, but enduring. As a result, this article challenges the traditional short-term focus of fiscal policy regarding education expenditures, implying that growth is best supported by consistent and well-targeted educational investments. By addressing gaps in the literature, this research contributes to both academic debates and practical policymaking. It is crucial for policymakers as it challenges conventional short-term fiscal perspectives by providing compelling evidence of the long-term economic benefits of educational expenditures.