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Institutions and the Impact of Government Spending on Growth

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  • James L. Butkiewicz

    ()
    (Department of Economics,University of Delaware)

  • Halit Yanikkaya

    ()
    (Department of Economics,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 in developing nations influences the productivity of government spending. The effects of categories of government spending on growth are also examined. No significant positive effects are found for defense, education and health variables. Consumption expenditures have negative growth effects in developed and developing nations, with a more detrimental impact 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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File URL: http://graduate.lerner.udel.edu/sites/default/files/ECON/PDFs/RePEc/dlw/WorkingPapers/2008/UDWP2008-23.pdf
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Bibliographic Info

Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 08-23.

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Length: 34 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:dlw:wpaper:08-23.

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Postal: Purnell Hall, Newark, Delaware 19716
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Fax: (302) 831-6968
Web page: http://www.lerner.udel.edu/departments/economics/department-economics/
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Keywords: Government spending; Institutional Quality; Economic Growth;

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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 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 1903, Kiel Institute for the World Economy.

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