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Government for the People:on the Determinants of the Size of U.S. Government

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  • Tamim Bayoumi
  • Fernando M. Gonçalves

Abstract

Trends in the size of U.S. government are examined. In the postwar period, general government primary spending rose by ¼ percent of GDP a year through 1975, stabilizing thereafter. With higher social transfers offset by a lower burden of defense spending, expansion reflected a baby-boom driven rise in education spending. The parallel improvement in tax efficiency helped equate the benefits of higher spending with the costs from higher taxation, in accordance with a marginalist view of the size of government. Looking forward, the retirement of baby boomers appears likely to expand government and lead to a more efficient tax system.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/289.

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Length: 31
Date of creation: 01 Dec 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/289

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Related research

Keywords: Government expenditures; Tax systems; government spending; federal government; government revenue; defense spending; tax system; taxation; tax cuts; budget deficits; local government spending; tax revenue; primary deficit; budgetary institutions; budget constraint; public spending; tax increases; budget requirements; tax cut; fiscal years; tax policy; tax collection; budget balance; tax ratios; public finance; fiscal crises; primary surplus ratio; public deficits; public debt; budgetary process; spending cuts; fiscal system; tax bases; fiscal rules;

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  1. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(5), pages 914-27, October.
  2. Bohn, Henning & Inman, Robert P., 1996. "Balanced-budget rules and public deficits: evidence from the U.S. states," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 45(1), pages 13-76, December.
  3. Tsangyao Chang & Wen Rong Liu & Steven Caudill, 2002. "Tax-and-spend, spend-and-tax, or fiscal synchronization: new evidence for ten countries," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 34(12), pages 1553-1561.
  4. James M. Poterba, 1993. "State Responses to Fiscal Crisis: The Effects of Budgetary Institutionsand Politics," NBER Working Papers 4375, National Bureau of Economic Research, Inc.
  5. Henning Bohn, . "Budget Balance Through Revenue or Spending Adjustments ? Some Historical Evidence for the United States (Reprint 013)," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 3-91, Wharton School Rodney L. White Center for Financial Research.
  6. Tamim Bayoumi & Barry Eichengreen, 1995. "Restraining Yourself: The Implications of Fiscal Rules for Economic Stabilization," IMF Staff Papers, Palgrave Macmillan, vol. 42(1), pages 32-48, March.
  7. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(5), pages 940-71, October.
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