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Economic Growth and the Public Sector: A Comparison of Canada and Italy, 1870-2013

Author

Listed:
  • L. Di Matteo

    (Lakehead University, Canada)

  • T. Barbiero

    (Rimini Centre for Economic Analysis; Ryerson University, Canada)

Abstract

There is considerable evidence that the size of the public sector can influence an economy's rate of economic growth. We investigate public sector spending of central governments and economic performance in two G7 countries over the long-term, Canada and Italy. Their economic performance has diverged in the last 25 years and it is worth investigating whether the size of government was a contributing factor. We find that in both the case of Canada and Italy the size of central government spending directly affects the performance of their economies in an inverse U-shaped relationship known as a Scully/BARS Curve. These results suggest that along with modifying current central government size, other levels of governments may need to shrink their own spending.

Suggested Citation

  • L. Di Matteo & T. Barbiero, 2018. "Economic Growth and the Public Sector: A Comparison of Canada and Italy, 1870-2013," Working Paper series 18-08, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:18-08
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    Cited by:

    1. Caggiano, Giovanni & Castelnuovo, Efrem, 2011. "On the dynamics of international inflation," Economics Letters, Elsevier, vol. 112(2), pages 189-191, August.
    2. Karim M. Abadir, 2011. "Is the economic crisis over (and out)?," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 3(2), pages 102-108, October.
    3. Karim M. Abadir & Gabriel Talmain, 2012. "Beyond Co-Integration: Modelling Co-Movements in Macro finance," Working Paper series 25_12, Rimini Centre for Economic Analysis.
    4. Oleh Chornyi, 2019. "Futures Studies And Economic Development: An Interdisciplinary Approach," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 5, pages 21-28, October.
    5. Hüseyin Şen & Ayşe Kaya & Ayşegül Durucan, 2023. "New insights into the growth-maximizing size of government: evidence and implications for Turkey," Economic Change and Restructuring, Springer, vol. 56(4), pages 2243-2296, August.
    6. Giovanni Caggiano & Efrem Castelnuovo, 2008. "Long Memory and Non-Linearities in International Inflation," "Marco Fanno" Working Papers 0076, Dipartimento di Scienze Economiche "Marco Fanno".

    More about this item

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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