The Scope of Government and its Impact on Economic Growth in OECD Countries
AbstractThis paper investigates the relationship between the size of government and economic growth in OECD countries in 1960Â–2000. The underlying idea is that government expenditures on public goods basically have a positive effect on growth, but this growth effect tends to decline or even reverse when government is overdoing, e.g. by increasing expenditures in such a way that it ultimately also provides private goods. Empirical analyses based on panel estimates for 21 OECD countries support this hypothesis: Total government expenditures as well as expenditures by type indicate a significant negative impact on economic growth (excepting transfers and public investments).
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1034.
Length: 32 pages
Date of creation: Apr 2001
Date of revision:
Government expenditure; taxation and economic growth;
Find related papers by JEL classification:
- H1 - Public Economics - - Structure and Scope of Government
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
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