Meta-Analysis of the Impact of Fiscal Policies on Long-Run Growth
AbstractThe issue of whether the public sector enhances or retards long-run economic growth has been debated passionately in recent years. In this paper we use meta-analysis to shed light on the issue. A sample of 93 published studies, yielding 123 meta-observations, is used to examine the robustness of the evidence regarding the impact of fiscal policy on growth. We focus on five fiscal policy areas: general government consumption, tax rates, education expenditure, defence, and public infrastructure. Several meta-analytical techniques are applied, including frequency tabulation, logit analysis and rough set analysis. On balance, the evidence for a positive impact of policy on growth is rather weak, but the commonly identified importance of education and infrastructure is confirmed. The results are sensitive to several research design parameters. Cross-section studies are more likely to suggest a detrimental effect of "big government" on growth than studies using panel data, but they are unlikely to be able to correctly identify the growth impact of infrastructure. The probability that a study detects a significantly positive effect of public infrastructure on growth is the greater, the longer the time span of data used in the econometric analysis.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 02-028/3.
Date of creation: 21 Mar 2002
Date of revision: 23 Apr 2003
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Web page: http://www.tinbergen.nl
endogenous growth; fiscal policy; meta-analysis; rough set analysis.;
Find related papers by JEL classification:
- C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
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