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Budgetary Deficits and Government Expenditure Growth: Toward a More Accurate Empirical Specification

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  • George Tridimas

    (University of Reading)

Abstract

The aim of this study is to provide a more accurate perspective of the empirical relationship between government expenditure growth and budget deficits. It specifies a model of demand for government expenditures that focuses on the effects of the tax revenue ratio, the relative price ofgovernment spending, income, population, political factors, and the dynamic structure of the relationship. The model is tested with United Kingdom data for the period 1955-1988. Similar to previous studies, the results show that deficit finance increases the demand for government spending, but they reject the implicit restrictions imposed on the empirical specifications of the previous studies.

Suggested Citation

  • George Tridimas, 1992. "Budgetary Deficits and Government Expenditure Growth: Toward a More Accurate Empirical Specification," Public Finance Review, , vol. 20(3), pages 275-297, July.
    • Handle: RePEc:sae:pubfin:v:20:y:1992:i:3:p:275-297
    DOI: 10.1177/109114219202000301
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    References listed on IDEAS

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    1. G. Tridimas*, 1985. "Budget Deficits and the Growth of Public Expenditure in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 53(4), pages 251-257, December.
    2. Provopoulos, George A, 1982. "Public Spending and Deficits: The Greek Experience," Public Finance = Finances publiques, , vol. 37(3), pages 422-427.
    3. Niskanen, William A., 1978. "Deficits, government spending, and inflation : What is the evidence?," Journal of Monetary Economics, Elsevier, vol. 4(3), pages 591-602, August.
    4. Courakis, S. & Moura-Roque, F. & Tridimas, G., 1990. "Public Expenditures Growth In Greece And Portugal: Wagner'S Law And Beyond," Economics Series Working Papers 9990, University of Oxford, Department of Economics.
    5. Granger, C. W. J. & Newbold, Paul, 1986. "Forecasting Economic Time Series," Elsevier Monographs, Elsevier, edition 2, number 9780122951831 edited by Shell, Karl.
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    Cited by:

    1. Teresa Leal & Javier J. Pérez & Mika Tujula & Jean-Pierre Vidal, 2008. "Fiscal Forecasting: Lessons from the Literature and Challenges," Fiscal Studies, Institute for Fiscal Studies, vol. 29(3), pages 347-386, September.
    2. George Tridimas & Stanley L. Winer, 2004. "A Contribution to the Political Economy of Government Size: 'Demand', 'Supply' and 'Political Influence'," Carleton Economic Papers 04-04, Carleton University, Department of Economics.
    3. Castro, Vítor & Martins, Rodrigo, 2018. "Politically driven cycles in fiscal policy: In depth analysis of the functional components of government expenditures," European Journal of Political Economy, Elsevier, vol. 55(C), pages 44-64.
    4. Hondroyiannis, George & Papapetrou, Evangelia, 2001. "An Investigation of the Public Deficits and Government Spending Relationship: Evidence for Greece," Public Choice, Springer, vol. 107(1-2), pages 169-182, April.
    5. Paulo Reis Mourao, 2007. "Has Trade Openness Increased all Portuguese Public Expenditures? A Detailed Time-Series Study," Financial Theory and Practice, Institute of Public Finance, vol. 31(3), pages 225-247.
    6. Easaw, Joshy Z. & Garratt, Dean, 2006. "General elections and government expenditure cycles: Theory and evidence from the UK," European Journal of Political Economy, Elsevier, vol. 22(2), pages 292-306, June.

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