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Is There Any Race to the Top of Productive Government Expenditures? Evidence from OECD Countries (1970-1997)


  • Ismael Sanz

    (European Economy Group-Universidad Complutense de Madrid, Department of Applied Economics, Madrid)


This paper evaluates whether there has been any convergence in government expenditures. The results obtained, by means of the Tukey box-plot, sigma-convergence and conditional beta-convergence, reveal that there is a growing fiscal interdependence among OECD countries. I argue that there is strong evidence of a Òrace to the topÓ of government productive expenditures among OECD countries during the period 1970-1997. The econometric analysis shows that aggregate OECD productive expenditures have pressured countries to increase their own levels of productive expenditures, which might be indicating a competition to attract FDI. In contrast, there is no evidence of convergence in non-productive government expenditures.

Suggested Citation

  • Ismael Sanz, 2005. "Is There Any Race to the Top of Productive Government Expenditures? Evidence from OECD Countries (1970-1997)," European Political Economy Review, European Political Economy Infrastructure Consortium, vol. 3(Winter), pages 29-52.
  • Handle: RePEc:epe:journl:v:3:y:2005-2006:i:winter:p:29-52

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    Composition of government expenditure; convergence; economic integration; OECD;

    JEL classification:

    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • P45 - Economic Systems - - Other Economic Systems - - - International Linkages
    • P44 - Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation


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