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Government Size and Economic Growth: A Panel Data Study Comparing OECD and Non-OECD Countries

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  • Rajput, Sheraz
  • Tariq, Aziz

Abstract

This study examines the non-linear relationship between government size and economic growth following Armey (1995). Generalized Method of Moments (GMM) estimation technique is applied to panel data consisting of 89 countries from 1990 to 2018. The results show substantial evidence for Armey curve across non-OECD countries. The findings suggest that a rise in government size initially enhances economic growth but later government size reduces economic growth once the government size crosses a certain threshold. However, the findings relating to the OECD countries do not support the presence of Armey curve.

Suggested Citation

  • Rajput, Sheraz & Tariq, Aziz, 2019. "Government Size and Economic Growth: A Panel Data Study Comparing OECD and Non-OECD Countries," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 26(2), December.
    • Handle: RePEc:ags:thkase:338424
    DOI: 10.22004/ag.econ.338424
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    Cited by:

    1. Lucas Menescal & José Alves, 2022. "Optimal Threshold Taxation: An Empirical Investigation for Developing Economies," CESifo Working Paper Series 9782, CESifo.
    2. Coayla, Edelina, 2021. "The Optimal Size of Government and the Armey Curve: A Review of Empirical Evidence," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 28(1).

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    More about this item

    Keywords

    Public Economics;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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