IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

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

  • Massimo Florio

    ()

  • Sara Colautti

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

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

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 look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Springer in its journal Public Choice.

Volume (Year): 122 (2005)
Issue (Month): 3 (March)
Pages: 355-393

as
in new window

Handle: RePEc:kap:pubcho:v:122:y:2005:i:3:p:355-393
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100332

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Alan T. Peacock & Jack Wiseman, 1961. "The Growth of Public Expenditure in the United Kingdom," NBER Books, National Bureau of Economic Research, Inc, number peac61-1.
  2. Oliver, F R, 1969. "Another Generalisation of the Logistic Growth Function," Econometrica, Econometric Society, vol. 37(1), pages 144-47, January.
  3. Fölster, Stefan & Henrekson, Magnus, 2000. "Growth Effects of Government Expenditure and Taxation in Rich Countries," SSE/EFI Working Paper Series in Economics and Finance 391, Stockholm School of Economics.
  4. Feldstein, Martin, 1997. "How Big Should Government Be?," Scholarly Articles 3043427, Harvard University Department of Economics.
  5. Baumol, William J & Blackman, Sue Anne Batey & Wolff, Edward N, 1985. "Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 806-17, September.
  6. Ng, Yew-Kwang, 2000. "The Optimal Size of Public Spending and the Distortionary Cost of Taxation," National Tax Journal, National Tax Association, vol. 53(n. 2), pages 253-72, June.
  7. Rodrik, Dani, 1996. "Why do More Open Economies Have Bigger Governments?," CEPR Discussion Papers 1388, C.E.P.R. Discussion Papers.
  8. James M. Buchanan & Richard A. Musgrave, 1999. "Public Finance and Public Choice: Two Contrasting Visions of the State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024624.
  9. Tanzi,Vito & Schuknecht,Ludger, 2000. "Public Spending in the 20th Century," Cambridge Books, Cambridge University Press, number 9780521664103, June.
  10. Henrekson, Magnus, 1993. "Wagner's Law--A Spurious Relationship?," Public Finance = Finances publiques, , vol. 48(3), pages 406-15.
  11. Feldstein, Martin, 1997. "How Big Should Government Be?," National Tax Journal, National Tax Association, vol. 50(2), pages 197-213, June.
  12. Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, number 9780521894753, June.
  13. Tridimas, George, 2001. "The Economics and Politics of the Structure of Public Expenditure," Public Choice, Springer, vol. 106(3-4), pages 299-316, March.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

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)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.