IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v122y2005i3p355-393.html
   My bibliography  Save this article

A logistic growth theory of public expenditures: A study of five countries over 100 years

Author

Listed:
  • Massimo Florio

    ()

  • Sara Colautti

Abstract

This paper offers a new theory and empirical testing of long-term trends of public expenditures for five countries. While Wagner’s Law would imply an exponential growth process of the ratio between public expenditures and national income (G/Y), the law should be rejected both on theoretical and empirical grounds, because it disregards the role of ever increasing distortionary taxation. However, under some conditions, the combination of Wagner’s Law and the Pigou’s conjecture that the excess burden of taxation constrains the growth of public expenditures can be captured by a non-linear first order differential equation. The equation is the Verhulst’s logistic, originally invented to model Malthusian predictions on population growth. The integration of a Verhulst equation generates an S-shaped curve. This analytical framework combines intuitions from a welfare economics and a public choice perspective, and potentially offers a new research strategy on the dynamics of government expenditures. We offer preliminary econometric estimates on long run trends (around 1870–1990) of G/Y in U.S., U.K., France, Germany, Italy. These estimates confirm a pattern of similar trajectories, in spite of different national parameters, and suggest that the logistic view of growth of government is consistent with observed data. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Massimo Florio & Sara Colautti, 2005. "A logistic growth theory of public expenditures: A study of five countries over 100 years," Public Choice, Springer, vol. 122(3), pages 355-393, March.
  • Handle: RePEc:kap:pubcho:v:122:y:2005:i:3:p:355-393
    DOI: 10.1007/s11127-005-3900-y
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11127-005-3900-y
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. François Facchini & Mickael Melki, 2014. "Political Ideology And Economic Growth: Evidence From The French Democracy," Economic Inquiry, Western Economic Association International, vol. 52(4), pages 1408-1426, October.
    2. Frits Bos & Thomas van der Pol & Gerbert Romijn, 2018. "Should CBA’s include a correction for the marginal excess burden of taxation?," CPB Discussion Paper 370, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Bucci, Alberto & Florio, Massimo & La Torre, Davide, 2012. "Government spending and growth in second-best economies," Economic Modelling, Elsevier, vol. 29(3), pages 654-663.
    4. Alberto Bucci & Massimo Florio & Davide La Torre, 2009. "Transitional Dynamics in a Growth Model with Government Spending, Technological Progress and Population Change," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1082, Universitá degli Studi di Milano.
    5. Gerrit B. Koester & Christoph Priesmeier, 2013. "Does Wagner´s Law Ruin the Sustainability of German Public Finances?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 69(3), pages 256-288, September.
    6. Dimitrios Sideris, 2007. "Wagner's Law in 19th Century Greece: A Cointegration and Causality Analysis," Working Papers 64, Bank of Greece.
    7. Livio Di Matteo & Fraser Summerfield, 2018. "The Shifting Scully Curve: International Evidence from 1870 to 2013," Working Paper series 18-01, Rimini Centre for Economic Analysis.
    8. Massimo FLORIO & Andrea BASTIANIN & Paolo CASTELNOVO, 2017. "The Socio–Economic Impact of a Breakthrough in the Particle Accelerators’ Technology: A Research Agenda," Departmental Working Papers 2017-18, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    9. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, vol. 31(C), pages 1-14.
    10. Szarowska Irena, 2013. "Relationship between government expenditure and output in the problematic regions in the European Union," Экономика региона, CyberLeninka;Федеральное государственное бюджетное учреждение науки «Институт экономики Уральского отделения Российской академии наук», issue 4 (36), pages 190-199.
    11. Magazzino, Cosimo, 2010. "Wagner's law and augmented Wagner's law in EU-27. A time-series analysis on stationarity, cointegration and causality," MPRA Paper 26668, University Library of Munich, Germany.
    12. Soumalya Mukhopadhyay & Arnab Hazra & Amiya Ranjan Bhowmick & Sabyasachi Bhattacharya, 2016. "On comparison of relative growth rates under different environmental conditions with application to biological data," METRON, Springer;Sapienza Università di Roma, vol. 74(3), pages 311-337, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:122:y:2005:i:3:p:355-393. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.