Public spending and economic growth: evidences from the economy of the state of Ceara

This paper seeks to shed light on the relationship of public spending and economic growth. Its main concern is guided by two tasks: an executive summary, e.g, a review literature but also to develop a view of the role played by some real spending within cearenses municipalities and its economic growth. The expenses consider: public health and sanitation; urbanism and dwelling, employee's payroll and legislature. The physical and human capital is added into the explanation. For, one makes use of an equivalent amount to 122 from 184 cearenses municipalities regarding the 2002-2009 period. It assumes a dynamic approach in Arellano-Bond (1991) outlook. The problematic will be discussed within the framework of Barro idiosyncratic tenet: his so-called 1990 production function which has precisely as main aim to discover which kind of spendings would be influencing the economic growth of cearenses municipalities as well. All in all the following points are reached: physical and human capital is decisive for increasing economic growth of cearenses municipalities. Regardless to say that human capital is better placed than the physical one. As an immediate consequence, public policies should be required especially the ones concern education which are really urgent. Health and sanitation expenses as well legislature have no relationship to outcome. However, the expenses related to urbanism and dwelling, employee's payroll had positive impact on GDP per capita.