Heterogeneity in the Effects of Investment Growth and Public Expenditure Growth across Syrian Economic Growth Levels Using a Quantile Regression Approach

Abstract

The study measures how the effects of investment growth and public expenditure growth vary across different levels of Syrian economic growth over 1971–2022 using a quantile regression framework. It argues that fiscal and investment elasticities may differ between low, median, and high growth regimes. Descriptive statistics and time-series plots indicate pronounced volatility and departures from normality. Series properties are then assessed using Phillips–Perron unit root tests with variable-specific deterministic components, confirming stationarity at levels and enabling direct model estimation. A symmetry test rejects coefficient symmetry around the median, implying that the effectiveness of public spending and investment differs between the lower and upper tails of the growth distribution. At the 0.10 quantile, both public expenditure growth and investment growth display positive and statistically significant associations with economic growth, consistent with stronger policy effectiveness during low-growth conditions and recovery phases. At the 0.90 quantile, public expenditure growth remains positive and significant, whereas the effect of investment growth becomes statistically insignificant, suggesting that supply constraints, financing frictions, and implementation bottlenecks reduce the marginal growth return of investment under high-growth states.