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Government Size, Composition, Volatility and Economic Growth

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  • António Afonso
  • Davide Furceri

Abstract

This paper analyses the effects in terms of size and volatility of government revenue and spending on growth in OECD and EU countries. The results of the paper suggest that both variables are detrimental to growth. In particular, looking more closely at the effect of each component of government revenue and spending, the results point out that i) indirect taxes (size and volatility); ii) social contributions (size and volatility); iii) government consumption (size and volatility); iv) subsidies (size); and v) government investment (volatility) have a sizeable, negative and statistically significant effect on growth.

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File URL: http://pascal.iseg.utl.pt/~depeco/wp/wp042008.pdf
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Bibliographic Info

Paper provided by Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon. in its series Working Papers with number 2008/04.

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Date of creation: Jan 2008
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Handle: RePEc:ise:isegwp:wp42008

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Postal: Department of Economics, School of Economics and Management (ISEG), Technical University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: https://aquila.iseg.utl.pt/aquila/departamentos/EC

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Keywords: Fiscal Policy; Government Size; Fiscal Volatility; Economic Growth.;

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