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Government Size, Government Debt and Economic Performance with Particular Application to New Zealand

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  • J. Stephen Ferris

Abstract

type="main" xml:id="ecor12119-abs-0001"> This analysis finds that long-run government size and private per capita output have an inverted U-shaped relationship, with the positive effect of government size peaking at close to 30 per cent of GDP. As larger debt is also associated with lower levels of private output, the recent policy of contraction in government size and debt in New Zealand has produced an output premium. The short-run analysis suggests that the inverse relationship found between changes in government size and economic growth is attributable to counter-cyclical fiscal policy. This reinforces the traditional role of fiscal policy in New Zealand while cautioning against longer-run spillovers from larger government size and debt.

Suggested Citation

  • J. Stephen Ferris, 2014. "Government Size, Government Debt and Economic Performance with Particular Application to New Zealand," The Economic Record, The Economic Society of Australia, vol. 90(290), pages 365-381, September.
    • Handle: RePEc:bla:ecorec:v:90:y:2014:i:290:p:365-381
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    File URL: http://hdl.handle.net/10.1111/ecor.2014.90.issue-290
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    Citations

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    Cited by:

    1. Ferris, J. Stephen & Voia, Marcel C., 2015. "The effect of federal government size on private economic performance in Canada: 1870–2011," Economic Modelling, Elsevier, vol. 49(C), pages 172-185.
    2. Min, Jeoung-Sik & Lim, Seul-Ye & Yoo, Seung-Hoon, 2019. "Economic output-maximizing share of combined heat and power generation: The case of South Korea," Energy Policy, Elsevier, vol. 132(C), pages 1087-1091.
    3. Gyeong-Sam Kim & Hyo-Jin Kim & Seung-Hoon Yoo, 2019. "Optimal Share of Natural Gas in the Electric Power Generation of South Korea: A Note," Sustainability, MDPI, vol. 11(13), pages 1-6, July.
    4. J. Stephen Ferris & Marcel-Cristian Voia, 2014. "Does Aggregate Government Size Effect Private Economic Performance in Canada?," Carleton Economic Papers 14-13, Carleton University, Department of Economics.
    5. J. Stephen Ferris, 2020. "What happens when voting rules change? the case of New Zealand," Constitutional Political Economy, Springer, vol. 31(3), pages 267-291, September.
    6. Petr Zimčík, 2016. "Velikost veřejného sektoru a ekonomický růst [The Scope of Government and Economic Growth]," Politická ekonomie, Prague University of Economics and Business, vol. 2016(4), pages 439-450.
    7. Hüseyin Şen & Ayşe Kaya & Ayşegül Durucan, 2023. "New insights into the growth-maximizing size of government: evidence and implications for Turkey," Economic Change and Restructuring, Springer, vol. 56(4), pages 2243-2296, August.

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