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Government Size And Growth: A Survey And Interpretation Of The Evidence – A Comment

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  • Carsten Colombier

Abstract

In contrast to the commonly held view, Bergh and Henrekson (2011) conclude that a consensus has almost been reached on the thesis that government size is negatively correlated with economic growth in developed countries. They underpin this by claiming that the only study in the survey to deviate from this consensus view, i.e. Colombier (2009), was rebutted by Bergh and Öhrn (2011). This comment shows that the claim by Bergh and Henrekson (2011) cannot be upheld because the analysis by Bergh and Öhrn (2011) is based on a flawed dataset. The re-estimation of Colombier's (2009) regressions with time-fixed effect does not reject his main findings. Moreover, it is demonstrated that recent empirical evidence on the growth impact of government size in rich countries is not as unanimous as the survey by Bergh and Henrekson (2011) suggests. Thus, the claim that a consensus view has been reached is premature.

Suggested Citation

  • Carsten Colombier, 2015. "Government Size And Growth: A Survey And Interpretation Of The Evidence – A Comment," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 887-895, December.
    • Handle: RePEc:bla:jecsur:v:29:y:2015:i:5:p:887-895
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    File URL: http://hdl.handle.net/10.1111/joes.12080
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    References listed on IDEAS

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    1. Bergh, Andreas & Öhrn, Nina, 2011. "Growth Effects of Fiscal Policies: A Critical Appraisal of Colombier’s (2009) Study," Working Paper Series 864, Research Institute of Industrial Economics.
    2. Loizides, John & Vamvoukas, George, 2005. "Government Expenditure and Economic Growth: Evidence from Trivariate Causality Testing," Journal of Applied Economics, Universidad del CEMA, vol. 8(1), pages 1-28, May.
    3. Hall, Alastair, 1994. "Testing for a unit root in time series using instrumental variable estimators with pretest data based model selection (vol. 54 (1992) pp. 223-250)," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 321-321.
    4. Andreas Bergh & Magnus Henrekson, 2011. "Government Size And Growth: A Survey And Interpretation Of The Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 25(5), pages 872-897, December.
    5. Wu, Shih-Ying & Tang, Jenn-Hong & Lin, Eric S., 2010. "The impact of government expenditure on economic growth: How sensitive to the level of development?," Journal of Policy Modeling, Elsevier, vol. 32(6), pages 804-817, November.
    6. Arusha Cooray, 2009. "Government Expenditure, Governance and Economic Growth," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 51(3), pages 401-418, September.
    7. C. Colombier, 2009. "Growth effects of fiscal policies: an application of robust modified M-estimator," Applied Economics, Taylor & Francis Journals, vol. 41(7), pages 899-912.
    8. Wahab, Mahmoud, 2011. "Asymmetric output growth effects of government spending: Cross-sectional and panel data evidence," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 574-590, October.
    9. Hall, Alastair R, 1994. "Testing for a Unit Root in Time Series with Pretest Data-Based Model Selection," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(4), pages 461-470, October.
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