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Growth and Government: Is there a Difference between Developed and Developing Countries?

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  • Strauss, Tove

    (Dept. of Economics, Stockholm School of Economics)

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    Abstract

    We examine the role of government for growth in 64 industrialized and developing countries, considering both expenditure and financing aspects of government. Recognizing that there are differences between the two country groups leading to severe heteroskedasticity, we use weighted least squared estimations. The general conclusion is that the means of financing matters more for growth than do government spending. We find that seigniorage and budget surplus are important for growth in LDCs but not in industrialized countries, while capital revenue matters only in the latter group. Moreover, the level of indebtedness is a negative determinant of growth in LDCs.

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    Bibliographic Info

    Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 275.

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    Length: 35 pages
    Date of creation: 23 Oct 1998
    Date of revision:
    Handle: RePEc:hhs:hastef:0275

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    Keywords: Growth; government; public expenditure; public financing.;

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