The Effect of Government Expenditure on Inflation Rate During the Period from 1994 to 2016

The study examines long and short-term effects for each of the government spending, gross domestic product, money supply in broad, trade openness on the dependent variable inflation rate in Egypt, by using autoregressive distributed lag model (ARDL), on annual time series covering the period (1994-2016). Results of the study showed that there is a long-term relation between the model variables, and there is reserve effect for each of gross domestic product and government spending on inflation rate, and there is positive effect for each of broad money supply and trade openness on inflation rate in short and long term. Results of the study showed that inflation in Egypt resulting from the supply side, therefore it is important to direct government investment spending for the productive sectors, rationalization of government consumer spending, attention to medium and small projects to cover the local market, adjust monetary expansion in line with the GDP growth rate, production productivity, increase investment in human capital, infrastructure and technology.