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Economic Growth and Government Size in OECD Countries: New Evidence from the Quantile Regression Approach

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  • Sheng-Tung Chen

    (Assistant Professor, Department of Public Finance, Feng Chia University)

  • Chi-Chung Chen

    (Professor, Department of Applied Economics, National Chung-Hsing University)

  • Yoonbai Kim

    (Associate Professor, Department of Economics, University of Kentucky)

Abstract

The purpose of this paper is to employ the quantile regression methodology to investigate the relationship between government size and economic growth using a panel data set for 24 OECD countries. We find that the magnitude of the effect of government size on economic growth varies through the quantiles. When the economic growth is low, increasing the size of the government may have a positive effect and stimulate economic growth. However, as the economic growth rate increases, such an effect declines and has a negative effect on economic growth.

Suggested Citation

  • Sheng-Tung Chen & Chi-Chung Chen & Yoonbai Kim, 2011. "Economic Growth and Government Size in OECD Countries: New Evidence from the Quantile Regression Approach," Economics Bulletin, AccessEcon, vol. 31(1), pages 416-425.
    • Handle: RePEc:ebl:ecbull:eb-10-00507
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    References listed on IDEAS

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    1. Folster, Stefan & Henrekson, Magnus, 2001. "Growth effects of government expenditure and taxation in rich countries," European Economic Review, Elsevier, vol. 45(8), pages 1501-1520, August.
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    Cited by:

    1. anwar, saba & munir, kashif, 2013. "Size of the Government, Quality of Institutions and Growth in SAARC Countries," MPRA Paper 49524, University Library of Munich, Germany.
    2. Uchechi Shirley Anaduaka & Vivian Ikwuoma Nnetu & Stephen Ekene Aguegboh & David Iheke Okorie, 2016. "Relative Maxima of the Public Sector: A Comparative Study of Nigeria and Ghana," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(11), pages 575-589, November.
    3. Choudhry Mohammad HANIF & Elsadig Musa AHMED, 2018. "Economic Development In Sub-Saharah Africa And Analysis Of Wagner`S Law, 2005-2015," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 18(2), pages 101-116.
    4. Khairunisah Rahmatullah & Azwardi & Sairuki Sukanto, 2022. "The Relationship between the Government Size and Economic Growth in South Sumatra," Oblik i finansi, Institute of Accounting and Finance, issue 3, pages 110-118, September.

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    More about this item

    Keywords

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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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