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Optimal Government Size and Economic Growth in France (1871-2008): An explanation by the State and Market Failures

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This paper analyses the effect of public expenditure on economic growth from both a theoretical and an empirical point of view. Given that the economic literature supplies numerous and conflicting views on the topic, the article offers a framework combining both theories of market failures and State failures to account for an inverted U-shapped relation between government size and GDP growth. The empirical contribution is to provide evidence through a long time-series analysis of the existence of such a relation on the period 1871-2008 for France, which offers one of the longest stable democratic periods to analyse.

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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 11077.

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Length: 38 pages
Date of creation: Dec 2011
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Handle: RePEc:mse:cesdoc:11077

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Keywords: Public spending; public expenditure; government size; BARS curve; Armey Curve; economic growth; market failure; France.;

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Cited by:
  1. François Facchini & Mickaël Melki, 2013. "Political Ideology and Economic Growth: Evidence from the French Democracy," Documents de travail du Centre d'Economie de la Sorbonne 13077, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  2. François Facchini & Mickaël Melki, 2012. "Political Ideology and Economic Growth in a Democracy: The French Experience, 1871 - 2009," Documents de travail du Centre d'Economie de la Sorbonne 12003, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  3. Facchini, François, 2014. "Retour sur la crise et les politiques mises en œuvre : une perspective autrichienne
    [Past and Future of the crisis]
    ," MPRA Paper 52984, University Library of Munich, Germany.
  4. Facchini, Francois, 2014. "The determinants of public spending: a survey in a methodological perspective," MPRA Paper 53006, University Library of Munich, Germany.
  5. Hernán Vallejo, 2012. "Mainstream Economics in the Early 21st Century: What, How and How Far," DOCUMENTOS CEDE 010013, UNIVERSIDAD DE LOS ANDES-CEDE.

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