The work of Gwartney, Holcombe and Lawson (GHL, 1998) is cited in New Zealand debate to demonstrate that a larger government share of GDP is detrimental for economic growth. Their work is reassessed here. We find a number of omissions in their analysis lead to a considerable over-statement of the effect of government size on growth. More important for growth, according to other recent work, are the structures of government revenues and expenditures. The size and structure of New Zealand government flows are examined using recent IMF data. This analysis indicates that New Zealand has a relatively small government sector. However, the structures of both government revenues and expenditures warrant attention.
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Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number
03_10.
Find related papers by JEL classification: E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
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