Factors that Explain the Monetary Base and Government Expenditure Variations, Bayesian Model Averaging Approach

The goal of this study is to analyze the government policy-making manner, by specifying the factors that explain the monetary base and government expenditurevariations, using Bayesian Model Averaging method. Some of the more important results are as follows: The government expenditure is one of the main determinants ofmonetary base variations. Political factors play an important role in government expenditure variations. Government does not implement contractionary policies when prices accelerate or does not implement expansionary policies when output growth decreases. The results show that the oil revenue for government is one of the most important factors that affect government expenditure.

Keywords:

Monetary Base , Government Expenditures , Economic Policy , Bayesian Model Averaging