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Fiscal Composition and Long-term Growth

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  • António Afonso
  • João Tovar Jalles

Abstract

We assess the fiscal composition-growth nexus, using a large country panel, accounting for the usually encountered econometric pitfalls. Our results show that revenues have no significant impact on growth whereas expenditures have negative effects. The same is true for the OECD with the addition that government revenue has a negative impact on growth. From our results, taxes on income are less for growth enhancing, as well as public wages, interest payments, subsidies and government consumption, while spending on education and health boosts growth.
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  • António Afonso & João Tovar Jalles, 2013. "Fiscal Composition and Long-term Growth," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
  • Handle: RePEc:erf:erfssc:74-5
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    Cited by:

    1. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    2. Awaworyi Churchill, Sefa & Yew, Siew Ling & Ugur, Mehmet, 2015. "Effects of Government Education and Health Expenditures on Economic Growth: A Meta-analysis," EconStor Preprints 110901, ZBW - German National Library of Economics.
    3. Nazila Alinaghi & W. Robert Reed, 2016. "Taxes and Economic Growth in OECD Countries: A Meta-Analysis," Working Papers in Economics 16/37, University of Canterbury, Department of Economics and Finance.
    4. Simona V?eti?ková, 2017. "The Government Expenditure Structure and Economic growth," Proceedings of Economics and Finance Conferences 4507467, International Institute of Social and Economic Sciences.
    5. Norman Gemmell & Richard Kneller & Ismael Sanz, 2016. "Does the Composition of Government Expenditure Matter for Long-Run GDP Levels?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(4), pages 522-547, August.
    6. Sefa Awaworyi & Siew Ling Yew, 2014. "Government Transfers and Growth: Is there Evidence of Genuine Effect?," Monash Economics Working Papers 40-14, Monash University, Department of Economics.
    7. Marta Simões & Adelaide Duarte & João Sousa Andrade, 2014. "Assessing the Impact of the Welfare State on Economic Growth: A Survey of Recent Developments," GEMF Working Papers 2014-20, GEMF, Faculty of Economics, University of Coimbra.
    8. Zuzana Machova & Igor Kotlan, 2014. "Expenditures on Collective and Individual Services: Discussion on the Classification of Government Expenditures with Regard to their Inclusion into Growth Models," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 4, pages 287-296, December.
    9. Teixeira, Aurora A.C. & Queirós, Anabela S.S., 2016. "Economic growth, human capital and structural change: A dynamic panel data analysis," Research Policy, Elsevier, vol. 45(8), pages 1636-1648.
    10. repec:eee:ecmode:v:64:y:2017:i:c:p:270-287 is not listed on IDEAS
    11. Irena Szarowská, 2016. "Quality of Public Finance and Economic Growth in the Czech Republic," Working Papers 0030, Silesian University, School of Business Administration.
    12. Anabela Queirós & Aurora A.C. Teixeira, 2014. "Economic growth, human capital and structural change: an empirical analysis," FEP Working Papers 549, Universidade do Porto, Faculdade de Economia do Porto.
    13. Zuzana Machová & Igor Kotlán, 2015. "Právní jistota - možný problém daňové politiky vyspělých zemí?
      [Legal Certainty - Possible Problem of Tax Policy in Developed Countries?]
      ," Politická ekonomie, University of Economics, Prague, vol. 2015(7), pages 833-846.

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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