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Analysis of the optimal size of the government consumption

Author

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  • Josheski, Dushko
  • Lazarov, Darko
  • Koteski, Cane

Abstract

The aim of this paper is to investigate the size of the government in 12 OECD countries. Data are gathered from Penn Tables. Clustered robust OLS estimation techniques have been used. Also Panel estimation techniques have been applied, FE and RE estimation. The functional form is quadratic is been used, to determine the point where the size of the government is optimal. Government consumption has been used as a proxy variable for government size.

Suggested Citation

  • Josheski, Dushko & Lazarov, Darko & Koteski, Cane, 2011. "Analysis of the optimal size of the government consumption," MPRA Paper 32983, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:32983
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    References listed on IDEAS

    as
    1. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    2. Charles T. Carlstrom & Jagadeesh Gokhale, 1991. "Government consumption, taxation, and economic activity," Economic Review, Federal Reserve Bank of Cleveland, vol. 27(Q III), pages 18-29.
    3. Heitger, Bernhard, 2001. "The Scope of Government and its Impact on Economic Growth in OECD Countries," Kiel Working Papers 1034, Kiel Institute for the World Economy (IfW Kiel).
    4. Philip Grossman, 1987. "The optimal size of government," Public Choice, Springer, vol. 53(2), pages 131-147, January.
    5. Scully, Gerald W, 2003. "Optimal Taxation, Economic Growth and Income Inequality," Public Choice, Springer, vol. 115(3-4), pages 299-312, June.
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    Cited by:

    1. Pater, Robert & Skica, Tomasz, 2014. "The productivity of public and private sector in Poland," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 10(2), pages 1-18.
    2. Coll Sebastian, 2014. "Is There Too Much Government in Developed Countries? A Time-Series Analysis of 24 OECD-Economies," Journal of Heterodox Economics, Sciendo, vol. 1(1), pages 1-30, June.

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    More about this item

    Keywords

    Government size; Clustered robust OLS; quadratic equation; Armey curve; Panel data; Fixed effect estimation; Random effects estimation; GLS ; Pooled OLS;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • H0 - Public Economics - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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