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A Synthesis of Empirical Research on the Impact of Government onLong-Run Growth

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  • Jacques Poot

Abstract

This paper provides a synthesis of the 1983-98 published literature on the empirical evidence regarding the interaction between government policies and growth. Five policy areas are considered: general government consumption, tax rates, education expenditures, defense and public infrastructure. The most conclusive results in the literature relate to the positive impact of education expenditures on growth. Public infrastructure also appears important. Regression analysis remains the most commonly adopted research methodology. A better link with current theories will be obtained when parameter calibration methods formicro-foundations based models replace parameter estimation of regression models with ad hoc specifications. Nonetheless, there remain severe limitations on what can be learned for policy from highly aggregative models of endogenous growth. Better data are needed at the regional macro and meso levels to complement thecurrently available pooled cross-section time-series country data. The potential endogeneity of government fiscal variables can be resolved through the selection of appropriate instrumental variables, such as those that arise in cases of "natural experiments". Copyright 2000 Gatton College of Business and Economics, University of Kentucky.

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Bibliographic Info

Article provided by Gatton College of Business and Economics, University of Kentucky in its journal Growth and Change.

Volume (Year): 31 (2000)
Issue (Month): 4 ()
Pages: 516-546

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Handle: RePEc:bla:growch:v:31:y:2000:i:4:p:516-546

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Cited by:
  1. Erdal Atukeren, 2006. "Politico-Economic Determinants of the Crowding-in Effects of Public Investments in Developing Countries," KOF Working papers 06-126, KOF Swiss Economic Institute, ETH Zurich.
  2. Theodore Palivos & Dimitrios Varvarigos, 2013. "Intergenerational Complementarities in Education, Endogenous Public Policy, and the Relation Between Growth and Volatility," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(2), pages 249-272, 04.
  3. Peter Nijkamp & Jacques Poot, Victoria, 2002. "Meta-Analysis of the Impact of Fiscal Policies on Long-Run Growth," Tinbergen Institute Discussion Papers 02-028/3, Tinbergen Institute, revised 23 Apr 2003.
  4. Bertarelli Silvia, 2006. "Capitale pubblico e crescita: una sintesi critica," Politica economica, Società editrice il Mulino, issue 3, pages 361-398.
  5. Nijkamp, Peter & Poot, Jacques, 2004. "Meta-analysis of the effect of fiscal policies on long-run growth," European Journal of Political Economy, Elsevier, vol. 20(1), pages 91-124, March.
  6. Kosempel, Stephen, 2004. "Finite lifetimes and government spending in an endogenous growth model," Journal of Economics and Business, Elsevier, vol. 56(3), pages 197-210.
  7. Abu-Bader, Suleiman & Abu-Qarn, Aamer, 2003. "Government Expenditures, Military Spending and Economic Growth: Causality Evidence from Egypt, Israel and Syria," MPRA Paper 1115, University Library of Munich, Germany.
  8. Benos, Nikos, 2009. "Fiscal policy and economic growth: empirical evidence from EU countries," MPRA Paper 19174, University Library of Munich, Germany.
  9. Stone, Joe & Bania, Neil, 2009. "Brains, drains, and roads, growth hills: complementarity between public education and infrastructure in a half-century panel of states," MPRA Paper 16173, University Library of Munich, Germany.
  10. Theodore Palivos & Dimitrios Varvarigos, 2009. "Intergenerational Complementarities in Education and the Relationship between Growth and Volatility," Discussion Paper Series 2009_05, Department of Economics, University of Macedonia, revised Mar 2009.
  11. W. Robert Reed & Cynthia L. Rogers, 2005. "Tax Cuts and Employment Growth in New Jersey: Lessons From a Regional Analysis," Urban/Regional 0506010, EconWPA.
  12. Nikos Benos, 2005. "Fiscal Policy and Economic Growth: Empirical Evidence from OECD," University of Cyprus Working Papers in Economics 1-2005, University of Cyprus Department of Economics.
  13. Hannum, Emily & Buchmann, Claudia, 2005. "Global Educational Expansion and Socio-Economic Development: An Assessment of Findings from the Social Sciences," World Development, Elsevier, vol. 33(3), pages 333-354, March.
  14. Bjorvatn, Kjetil & Coniglio, Nicola Daniele, 2012. "Big push or big failure? On the effectiveness of industrialization policies for economic development," Journal of the Japanese and International Economies, Elsevier, vol. 26(1), pages 129-141.
  15. Cheryl Gray & Tracey Lane & Aristomene Varoudakis, 2007. "Fiscal Policy and Economic Growth : Lessons for Eastern Europe and Central Asia," World Bank Publications, The World Bank, number 6883.
  16. Sohrab Abizadeh & Manish Pandey & Mehmet Serkan Tosun, 2007. "Impact of Trade on Productivity of Skilled and Unskilled Intensive Industries: A Cross-Country Investigation," Working Papers 07-007, University of Nevada, Reno, Department of Economics & University of Nevada, Reno , Department of Resource Economics.
  17. Norman Baldwin & Stephen Borrelli, 2008. "Education and economic growth in the United States: cross-national applications for an intra-national path analysis," Policy Sciences, Springer, vol. 41(3), pages 183-204, September.
  18. Federico Guerrero & Elliott Parker, 2007. "The Effect of Federal Government Size on Long-Term Economic Growth in the United States, 1792-2004," Working Papers 07-002, University of Nevada, Reno, Department of Economics & University of Nevada, Reno , Department of Resource Economics.
  19. Anwar, Sajid, 2006. "Provision of public infrastructure, foreign investment and welfare in the presence of specialisation-based external economies," Economic Modelling, Elsevier, vol. 23(1), pages 142-156, January.
  20. W. Robert Reed & Nurul Sidek, 2013. "A Replication of "Meta-Analysis of the Effect of Fiscal Policies on Long-Run Growth" (European Journal of Political Economy, 2004)," Working Papers in Economics 13/33, University of Canterbury, Department of Economics and Finance.

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