Growth and the Public Sector: a Reply
Abstract
Fvlster and Henrekson (1998) claim that they, by addressing a number of econometric problems, can establish that it is likely that economies with a large public sector grow more slowly than economies with a small public sector. But their regressions are fundamentally flawed. Re-estimating their growth equation using theoretically valid instruments, we find that the growth effect of the public sector is statistically insignificant, and much smaller than the point-estimates reported by Fvlster and Henrekson. This is consistent with the agnostic conclusion, drawn by us and many others, that cross-country growth regressions are unlikely to give a reliable answer to whether a large public sector is growth promoting or retarding.Download Info
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Bibliographic Info
Paper provided by Uppsala - Working Paper Series in its series Papers with number 1999:1.Length: 10 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:fth:uppaal:1999:1
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Postal: UPPSALA UNIVERSITY, DEPARTMENT OF ECONOMICS, S-751 20 UPPSALA SWEDEN.
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Fax: + 46 18 471 14 78
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Related research
Keywords: PUBLIC EXPENDITURES ; PUBLIC SECTOR ; ECONOMIC GROWTH;Other versions of this item:
- Agell, Jonas & Lindh, Thomas & Ohlsson, Henry, 1999. "Growth and the public sector: A reply," European Journal of Political Economy, Elsevier, vol. 15(2), pages 359-366, June.
- Agell, Jonas & Lindh, Thomas & Ohlsson, Henry, 1998. "Growth and the Public Sector: A reply," Working Paper Series 1999:1, Uppsala University, Department of Economics.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
References
References listed on IDEASPlease 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.:
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Arief Ramayandi, 2003. "Economic Growth And Government Size In Indonesia: Some Lessons For The Local Authorities," Working Papers in Economics and Development Studies (WoPEDS) 200302, Department of Economics, Padjadjaran University, revised Jul 2003.
- Petroulas, Pavlos, 2004. "Short-Term Capital Flows and Growth in Developed and Emerging Markets Pavlos," Research Papers in Economics 2004:4, Stockholm University, Department of Economics.
- Christoph Schaltegger & Benno Torgler, 2006.
"Growth effects of public expenditure on the state and local level: evidence from a sample of rich governments,"
Applied Economics,
Taylor and Francis Journals, vol. 38(10), pages 1181-1192.
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- Peter H. Lindert, 2003.
"Why the Welfare State Looks Like a Free Lunch,"
NBER Working Papers
9869, National Bureau of Economic Research, Inc.
- Peter Lindert, 2003. "Why The Welfare State Looks Like a Free Lunch," Working Papers 27, University of California, Davis, Department of Economics.
- Kalle Kukk, 2007. "Fiscal Policy Effects on Economic Growth: Short Run vs Long Run," Working Papers 167, Tallinn School of Economics and Business Administration, Tallinn University of Technology.
- Agell, Jonas & Ohlsson, Henry & Skogman Thoursie, Peter, 2003.
"Growth Effects of Government Expenditure and Taxation in Rich Countries: A Comment,"
Research Papers in Economics
2003:14, Stockholm University, Department of Economics.
- Agell, Jonas & Ohlsson, Henry & Thoursie, Peter Skogman, 2006. "Growth effects of government expenditure and taxation in rich countries: A comment," European Economic Review, Elsevier, vol. 50(1), pages 211-218, January.
- Gemmell, Norman, 2001.
"Fiscal Policy in a Growth Framework,"
Working Papers
UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Norman Gemmell, 2010. "Fiscal Policy in a Growth Framework," Working Papers id:3163, eSocialSciences.
- R. Schoonackers & F. Heylen, 2011. "Fiscal Policy and TFP in the OECD: A Non-Stationary Panel Approach," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/701, Ghent University, Faculty of Economics and Business Administration.
- repec:ebl:ecbull:v:8:y:2007:i:4:p:1-7 is not listed on IDEAS
- Ismael Sanz & Francisco J. Velázquez, 2001.
"The evolution and convergence of the government expenditure composition in the OECD countries: an analysis of the functional distribution,"
Public Economics
0111005, EconWPA.
- Ismael Sanz & Francisco J. Velazquez, 2001. "The evolution and convergence of the government expenditure composition in the OECD countries: an analysis of the functional distribution," European Economy Group Working Papers 9, European Economy Group.
- Lindert, Peter, 2002. "Why the Welfare Looks Like a Free Lunch," Working Papers 02-7, University of California at Davis, Department of Economics.
- Norman Gemmell & Richard Kneller, 2003.
"Fiscal Policy, Growth and Convergence in Europe,"
Treasury Working Paper Series
03/14, New Zealand Treasury.
- Richard Kneller & Norman Gemmell, 2002. "Fiscal Policy, Growth and Convergence in Europe," European Economy Group Working Papers 14, European Economy Group.
- 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.
- Felicity C Barker & Robert A Buckle & Robert W St Clair, 2008. "Roles of Fiscal Policy in New Zealand," Treasury Working Paper Series 08/02, New Zealand Treasury.
- Hrushikesh Mallick, 2008. "Government Spending, Trade Openness and Economic Growth in India: A Time Series Analysis," Working Papers id:1809, eSocialSciences.
- Julian Ramajo & Javier Salinas & Francisco Pedraja & Miguel Márquez, 2007. "Competition in the allocation of public spending: a new model to analyse the interaction between expenditure categories," Economics Bulletin, AccessEcon, vol. 8(4), pages 1-7.
- Jakee, Keith & Sun, Guang-Zhen, 2005. "External habit formation and dependency in the welfare state," European Journal of Political Economy, Elsevier, vol. 21(1), pages 83-98, March.
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