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Public Expenditure and Economic Performance in OECD Countries

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  • Saunders, Peter

Abstract

This paper presents data on the size and growth of general government expenditures and receipts relative to GDP in OECD countries over the 1960–81 period. A feature of these trends is the widespread appearance of budget deficits in the mid-seventies, following the sharp increase in government expenditures relative to GDP in the two years immediately after the first oil shock in 1973. Having presented these data, the paper tests several hypotheses relating the size and growth of government to macroeconomic performance using an international cross-section framework. The economic performance indicators used are the rate of economic growth, the rate of consumer price inflation and private sector employment growth. Overall, the results provide little evidence that government size and growth have been detrimental to economic performance, particularly in the period since 1975, although an inverse relation existed in the sixties between government size and economic growth.

Suggested Citation

  • Saunders, Peter, 1985. "Public Expenditure and Economic Performance in OECD Countries," Journal of Public Policy, Cambridge University Press, vol. 5(1), pages 1-21, February.
    • Handle: RePEc:cup:jnlpup:v:5:y:1985:i:01:p:1-21_00
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    Citations

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    Cited by:

    1. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    2. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, vol. 31(C), pages 1-14.
    3. Atrayee Ghosh Roy, 2009. "Evidence on economic growth and government size," Applied Economics, Taylor & Francis Journals, vol. 41(5), pages 607-614.
    4. 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.
    5. Matei, Ani & Matei, Lucica, 2010. "Reducing the Administrative Expenditures as Source for Increasing the Efficiency of Local Governance under Conditions of the Financial Crisis," Apas Papers 150, Academic Public Administration Studies Archive - APAS.
    6. Agell, Jonas & Lindh, Thomas & Ohlsson, Henry, 1997. "Growth and the public sector: A critical review essay," European Journal of Political Economy, Elsevier, vol. 13(1), pages 33-52, February.
    7. Arawatari, Ryo & Hori, Takeo & Mino, Kazuo, 2023. "Government expenditure and economic growth: A heterogeneous-agents approach," Journal of Macroeconomics, Elsevier, vol. 75(C).
    8. Michael Marlow, 1988. "Private sector shrinkage and the growth of industrialized economies: Reply," Public Choice, Springer, vol. 58(3), pages 285-294, September.
    9. 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.
    10. Olabode, Samuel & Ogunrinola, Adedeji, 2018. "Effect of Agricultural Price Volatility and Investment on the Economic Growth Of Nigeria: A Case of Cocoa Production (1981-2013)," MPRA Paper 100572, University Library of Munich, Germany, revised 2019.
    11. Henryk Gurgul & Łukasz Lach & Roland Mestel, 2012. "The relationship between budgetary expenditure and economic growth in Poland," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 20(1), pages 161-182, March.
    12. Amin, Sakib & Jamasb, Tooraj & Nepal, Rabindra, 2021. "Regulatory reform and the relative efficacy of government versus private investment on energy consumption in South Asia," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 421-433.
    13. Emilian DOBRESCU, 2016. "Controversies over the Size of the Public Budget," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 5-34, December.
    14. Ryo Arawatari & Takeo Hori & Kazuo Mino, 2020. "Productive government expenditure and economic growth in a heterogeneous-agents model," KIER Working Papers 1044, Kyoto University, Institute of Economic Research.
    15. Dadson Awunyo-Vitor & Ruby Adjoa Sackey, 2018. "Agricultural sector foreign direct investment and economic growth in Ghana," Journal of Innovation and Entrepreneurship, Springer, vol. 7(1), pages 1-15, December.
    16. Gurgul, Henryk & Lach, Łukasz, 2011. "Causality analysis between public expenditure and economic growth of Polish economy in last decade," MPRA Paper 52281, University Library of Munich, Germany.
    17. Edmund J. Sheehey, 1993. "The Effect of Government Size on Economic Growth," Eastern Economic Journal, Eastern Economic Association, vol. 19(3), pages 321-328, Summer.
    18. 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.
    19. Peter Saunders, 1988. "Private sector shrinkage and the growth of industrialized economies: Comment," Public Choice, Springer, vol. 58(3), pages 277-284, September.
    20. John McCallum & André Blais, 1987. "Government, special interest groups, and economic growth," Public Choice, Springer, vol. 54(1), pages 3-18, January.
    21. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, vol. 31(C), pages 1-14.
    22. World Bank, 2009. "Seychelles - Public Expenditure Review," World Bank Publications - Reports 3089, The World Bank Group.
    23. Poot, Jacques, 1999. "A meta-analytic study of the role of government in long-run economic growth," ERSA conference papers ersa99pa171, European Regional Science Association.
    24. Yobouet Thierry Bienvenu Gnangoin & Akadje Jean-Roland Edjoukou & Diby François Kassi, 2019. "Public Spending and Economic Growth in Latin America Countries: A Panel Fixed Effect Analysis," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 12(1), pages 50-63, April.

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