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Productive Government Expenditure And Economic Growth

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  • Andreas Irmen
  • Johanna Kuehnel

Abstract

We provide a comprehensive survey of the recent literature on the link between productive government expenditure and economic growth. We show that an understanding of the core results and the ensuing contributions can be gained from the study of their respective Euler equations. We argue that the existing literature incorporates many relevant aspects; however, policy recommendations tend to hinge on several knife‐edge assumptions. Therefore, future research ought to focus more on idea‐based endogenous growth models to check the robustness of policy recommendations. Moreover, the inclusion of hitherto unexplored types of government expenditure, e.g. on the ‘rule of law’, would be desirable.

Suggested Citation

  • Andreas Irmen & Johanna Kuehnel, 2009. "Productive Government Expenditure And Economic Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 692-733, September.
  • Handle: RePEc:bla:jecsur:v:23:y:2009:i:4:p:692-733
    DOI: 10.1111/j.1467-6419.2009.00576.x
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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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