Education Spending and Economic Growth: Short‐ and Long‐Term Effects in a Global Panel

ABSTRACT The role of public education spending in promoting economic growth is widely debated, yet empirical evidence distinguishing short‐run from long‐run effects remains limited. This paper estimates these effects using a CS‐ARDL model with error correction for a global panel of 107 countries (1970–2019), disaggregating spending by primary, secondary, and tertiary levels. A 1% increase in real per capita education expenditure is associated with 0.031% higher long‐run output for aggregate spending, 0.019% for both primary and secondary, and 0.013% for tertiary, with significant effects in both the short and the long run. Higher educational achievement, proxied by PISA scores, amplifies the growth impact of spending. These findings underscore the role of education quality in enhancing the productivity of public investment.