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The Scope of Government and its Impact on Economic Growth in OECD Countries

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Abstract

This paper investigates the relationship between the size of government and economic growth in OECD countries in 1960–2000. The underlying idea is that government expenditures on public goods basically have a positive effect on growth, but this growth effect tends to decline or even reverse when government is overdoing, e.g. by increasing expenditures in such a way that it ultimately also provides private goods. Empirical analyses based on panel estimates for 21 OECD countries support this hypothesis: Total government expenditures as well as expenditures by type indicate a significant negative impact on economic growth (excepting public investments) in these countries.

Suggested Citation

  • Heitger, Bernhard, 2002. "The Scope of Government and its Impact on Economic Growth in OECD Countries," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 55(3), pages 323-350.
    • Handle: RePEc:ris:ecoint:0181
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    Cited by:

    1. Massimiliano Mazzanti & Matteo Mazzarano & Andrea Pronti & Marco Quatrosi, 2020. "Fiscal policies, public investments and wellbeing: mapping the evolution of the EU," Insights into Regional Development, VsI Entrepreneurship and Sustainability Center, vol. 2(4), pages 725-749, December.

    More about this item

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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