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Determinants of the Composition of Government Expenditure by Functions

  • Ismael Sanz
  • Francisco Javier Velázquez

In this article we analyze the determinants of the functional distribution of government expenditure using for this purpose the models of the median voter's demand common in public choice literature. First of all, we review the economic literature on the factors affecting each component of government expenditure. Then, secondly, we develop a demand model of expenditure structure and we estimate the demand equations system for the sample of OECD countries in the period 1970-1997. The results reveal that, besides income and prices, institutional factors, population density and its age structure have significant effects on the composition of government expenditure.

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Paper provided by European Economy Group in its series European Economy Group Working Papers with number 13.

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Length: 31 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:eeg:euroeg:13
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