| dc.description.abstract | The main objective of the study was to investigate the relationship that exists between macroeconomic indicators and government fiscal policy initiatives in Kenya. Macroeconomic environment which consists of inflation, exchange rate, gross domestic product, investments and savings, demand for higher wages and salaries and a growing current account deficit are affected by the implementation of either expansionary fiscal policies or contractionary fiscal policies. Literature review was done and established both positive and negative relationship between government expenditure and economic growth. Descriptive research design was employed to describe relevant aspects of the phenomenon. Secondary data was collected and analyzed using both linear regression and autoregressive model. The analysis focused on descriptive statistics, correlation analysis, time series analysis, test of stationarity, lag length selection, correlogram of residuals, co-integration test, granger causality test, and post estimate analysis. Findings drawn from both linear regression analysis and auto regression model concluded that a short run relationship existed between macroeconomic indicators and government fiscal policy initiatives in Kenya. The study recommended that there is need to review the way government fiscal policies are formulated in order to make sure that they respond to appropriate macroeconomic indicators. Finally the study suggested that further studies on the relationship between macroeconomic indicators and government fiscal policy initiatives in Kenya should be conducted, based on different methodologies other than the ones the researcher applied so as to justify that short run relationship between the variables does exist and long run relationship does not exist. | en_US |
