Journal of Applied Sciences1812-56541812-5662Asian Network for Scientific Information10.3923/jas.2005.569.574JavedZahoor Hussain SahinozAhmet 3200553This study investigate relationships between economic growth, government spending and money supply over the period 1992:1 to 2003:3. Present findings investigate the directional and undirectional causality between economic growth and government spending in a bivariate system. On other hand, Engle-Granger and Phillips-Ouliaris tests shows no cointegration between economic growth and government spending. However, by the introduction of a third variable, money supply; in multivariate system the investigation indicates a directional causality from economic growth, government spending and money supply in the long run, with existence of undirectional causality from expenditure to money supply in the same period. Therefore, with exception to Johansen test, the Engle-Granger test and Phillips-Ouliaris show weak evidence for cointegration between economic growth, government spending and money supply. Nevertheless, present results show that economic growth is more volatile than the government spending and money supply, over the period under consideration, which is particularly important for policy-maker in that it is the macroeconomic policy of government that affects growth and influences the money supply and government spending.]]>Granger, C.W.J.,196937424438Engle, R.F. and C.W.J. Granger,198755251276Phillips, P. and S. Ouliaris,19901165193Johansen, S.,19915915511580Sims, C.A.,197262540552Keran, W.M.,19691st Edn.,pp: 5-23pp: 5-23Keran, W.M.,19701st Edn.,pp: 16-28pp: 16-28Andersen, C.L. and L.J. Jorden,19681st Edn.,pp: 11-23pp: 11-23Henrekson, M.,197348406415Murthy, N.R.V.,1993489296Levine, R. and D. Renelt,199282942963Dacy, D.C.,197565548561Ashworth, J.,199449282286Hayo, B.,199449287294Oxley, L.,199441286298Ahsan, S.M., A.C.C. Kwan and B.S. Sahni,198944204224Ahsan, S.M., A.C.C. Kwan and B.S. Sahni,199258623634Ahsan, S.M., A.C.C. Kwan and B.S. Sahni,19901990Ahsan, S.M., A.C.C. Kwan and B.S. Sahni,19962810551058Kennedy, P.,19984th Edn.,pp: 225-239pp: 225-239Hashemzadeh, N. and P. Taylor,19882016031611Jones, D.J.,198921809822Thornton, D.L. and B.S. Dallas,198517164178Granger, C.W.J. and P. Newbold,19742111120Ong, S.E.,19945418Bahmani-Oskooe, M., H. Mohtadi and G. Shabsigh,199136405415Dickey, D.A. and W.A. Fuller,197974427431MacKinnon, J.G., A.A. Hang and L. Michelis,199914563577