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Institutions and the impact of government spending on growth

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  • James L. Butkiewicz

    (University of Delaware)

  • Halit Yanikkaya

    (Gebze Institute of Technology)

Abstract

This paper reports the results of a study of the impact of government expenditures on economic growth, emphasizing how government effectiveness influences the efficiency of government spending. The effects of sub-categories of government spending on growth are also examined. Total expenditures are estimated to have negative growth effects for some groupings of developed nations. Consumption expenditures are found to have a detrimental growth effect in developing nations with ineffective governments. Developing nations with ineffective governments benefit from capital expenditures. To stimulate growth, developing nations should limit their governments’ consumption spending and invest in infrastructure.

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Bibliographic Info

Article provided by Universidad del CEMA in its journal Journal of Applied Economics.

Volume (Year): XIV (2011)
Issue (Month): (November)
Pages: 319-341

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Handle: RePEc:cem:jaecon:v:14:y:2011:n:2:p:319-341

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Keywords: economic growth; institutional quality; government expenditures;

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References

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Cited by:
  1. Kaushik, Arun & Rupayan Pal, 2012. "Political strongholds and budget allocation for developmental expenditure: Evidence from Indian states, 1971-2005," Indira Gandhi Institute of Development Research, Mumbai Working Papers, Indira Gandhi Institute of Development Research, Mumbai, India 2012-015, Indira Gandhi Institute of Development Research, Mumbai, India.
  2. Joscha Beckmann & Marek Endrich & Rainer Schweickert, 2014. "Government Activity and Economic Growth – One Size Fits All?," Kiel Working Papers, Kiel Institute for the World Economy 1903, Kiel Institute for the World Economy.

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