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Quality of public finances and growth

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Author Info
António Afonso () (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.)
Werner Ebert () (Bundesministerium der Finanzen, Detlev-Rohwedder-Haus,Wilhelmstrße 97, D-10117 Berlin, Germany.)
Ludger Schuknecht () (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.)
Michael Thöne () (Finanzwissenschaftliches Forschungsinstitut (FiFo), Köln University, Zülpicher Str. 182, D-50937 Köln, Germany.)

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Abstract

In this paper we review the linkages between the quality of public finances, that is, the level and composition of public expenditure and its financing via revenue and deficits, and economic growth. We review the various channels through which public finances affect growth and its underlying determinants (institutional framework, employment, savings and investment, innovation). The paper addresses the approaches used to assess the performance and efficiency of public spending, and surveys the empirical findings on the impact of fiscal variables on sustained economic growth.

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Publisher Info
Paper provided by European Central Bank in its series Working Paper Series with number 438.

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Length: 45 pages
Date of creation: Feb 2005
Date of revision:
Handle: RePEc:ecb:ecbwps:20050438

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Related research
Keywords: quality of public finances; efficiency; growth;

Other versions of this item:

Find related papers by JEL classification:
H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Sanghoon Ahn & Philip Hemmings, 2000. "Policy Influences on Economic Growth in OECD Countries: An Evaluation of the Evidence," OECD Economics Department Working Papers 246, OECD, Economics Department. [Downloadable!]
  2. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-47, April. [Downloadable!] (restricted)
    Other versions:
  3. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March. [Downloadable!] (restricted)
    Other versions:
  4. Giuseppe Carone & Aino Salomaki & Herwig Immervoll & Dominique Paturot, 2004. "Indicators of unemployment and low-wage traps (Marginal effective tax rates on labour)," Labor and Demography 0409007, EconWPA. [Downloadable!]
  5. Andrea Bassanini & Stefano Scarpetta, 2001. "Does Human Capital Matter for Growth in OECD Countries?: Evidence from Pooled Mean-Group Estimates," OECD Economics Department Working Papers 282, OECD, Economics Department. [Downloadable!]
  6. Steven P. Cassou & Kevin J. Lansing, 1999. "Fiscal Policy and Productivity Growth in the OECD," Canadian Journal of Economics, Canadian Economics Association, vol. 32(5), pages 1215-1226, November. [Downloadable!] (restricted)
    Other versions:
  7. 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. [Downloadable!] (restricted)
    Other versions:
  8. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "The Effect of Health on Economic Growth: Theory and Evidence," NBER Working Papers 8587, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Paul Cashin, 1994. "Government Spending, Taxes, and Economic Growth," IMF Working Papers 94/92, International Monetary Fund.
  10. Andrea Bassanini & Stefano Scarpetta & Philip Hemmings, 2001. "Economic Growth: The Role of Policies and Institutions: Panel Data. Evidence from OECD Countries," OECD Economics Department Working Papers 283, OECD, Economics Department. [Downloadable!]
  11. António Afonso & Miguel St. Aubyn, 2005. "Non-parametric approaches to education and health efficiency in OECD countries," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 227-246, November. [Downloadable!]
  12. Robert J. Barro & Paul Romer, 1993. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr93-1.
    Other versions:
    • Robert J. Barro & Paul M. Romer, 1991. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr91-1.
  13. Michael Bleaney & Norman Gemmell & Richard Kneller, 2001. "Testing the endogenous growth model: public expenditure, taxation, and growth over the long run," Canadian Journal of Economics, Canadian Economics Association, vol. 34(1), pages 36-57, February. [Downloadable!] (restricted)
  14. Dr. Peter Kenning & Hilke Plassmann, 2004. "NeuroEconomics," Experimental 0412005, EconWPA. [Downloadable!]
  15. António Afonso, 2004. "A Note on Public Spending Efficiency," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 2(1), pages 35-39, 04. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sebastian Hauptmeier & Martin Heipertz & Ludger Schuknecht, 2006. "Expenditure reform in industrialised countries - a case study approach," Working Paper Series 634, European Central Bank. [Downloadable!]
    Other versions:
  2. António Afonso & Davide Furceri, 2008. "Government size, composition, volatility and economic growth," Working Paper Series 849, European Central Bank. [Downloadable!]
    Other versions:
  3. Ignacio Lozano Espitia & Karen Rodríguez, 2009. "Assessing the Macroeconomic Effects of Fiscal," BORRADORES DE ECONOMIA 005386, BANCO DE LA REPÚBLICA. [Downloadable!]
  4. Moisa Altar & Judita Samuel, 2008. "The Influence of Fiscal Policy on Economic Growth," Advances in Economic and Financial Research - DOFIN Working Paper Series 7, Bucharest University of Economics, Center for Advanced Research in Finance and Banking - CARFIB. [Downloadable!]
  5. Xavier Debrun & Jean Pisani-Ferry & André Sapir, 2008. "Government Size and Output Volatility: Should We Forsake Automatic Stabilization?," IMF Working Papers 08/122, International Monetary Fund. [Downloadable!]
  6. Christian Bjørnskov & Axel Dreher & Justina Fischer, 2007. "The bigger the better? Evidence of the effect of government size on life satisfaction around the world," Public Choice, Springer, vol. 130(3), pages 267-292, March. [Downloadable!] (restricted)
    Other versions:
  7. Dimitri B. Papadimitriou, 2006. "Government Effects on the Distribution of Income: An Overview," Economics Working Paper Archive wp_442, Levy Economics Institute, The. [Downloadable!]
  8. António Afonso & Ludger Schuknecht & Vito Tanzi, 2006. "Public Sector Efficiency: Evidence for New EU Member States and Emerging Markets," Working Papers 2006/01, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
    Other versions:
  9. Ignacio Lozano & Karen Rodríguez, . "Assessing the Macroeconomic Effects of Fiscal Policy in Colombia," Borradores de Economia 552, Banco de la Republica de Colombia. [Downloadable!]
  10. Ludger Schuknecht & Vito Tanzi, 2005. "Reforming public expenditure in industrialised countries - are there trade-offs?," Working Paper Series 435, European Central Bank. [Downloadable!]
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