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Growth Effects of Fiscal Policies: A Critical Appraisal of Colombier’s (2009) Study


  • Bergh, Andreas

    () (Research Institute of Industrial Economics (IFN))

  • Öhrn, Nina

    () (Stockholm University)


In a recent paper, Colombier (2009) uses a robust estimation technique and claims to find empirical evidence that government size has not been detrimental to growth for OECD countries during the 1970 to 2001 period, and that endogenous growth theory is not corroborated. We examine the robustness of these findings, and show that Colombier’s results differ from those in other recent papers not because of the estimator used, but because of the exclusion of other control variables. Adding time fixed effects to Colombier’s data set, and using the same econometric method, we obtain results in line with other findings, corroborating endogenous growth theory. Adding further control variables illustrates the robustness of the negative correlation between total tax revenue and economic growth for both instrumented and non-instrumented regressions.

Suggested Citation

  • Bergh, Andreas & Öhrn, Nina, 2011. "Growth Effects of Fiscal Policies: A Critical Appraisal of Colombier’s (2009) Study," Working Paper Series 864, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0864

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    References listed on IDEAS

    1. Folster, Stefan & Henrekson, Magnus, 2001. "Growth effects of government expenditure and taxation in rich countries," European Economic Review, Elsevier, vol. 45(8), pages 1501-1520, August.
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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. António Afonso & João Jalles, 2016. "Economic performance, government size, and institutional quality," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(1), pages 83-109, February.
    3. Coll Sebastian, 2014. "Is There Too Much Government in Developed Countries? A Time-Series Analysis of 24 OECD-Economies," Journal of Heterodox Economics, De Gruyter Open, vol. 1(1), pages 1-30, June.

    More about this item


    Economic growth; Government size; Taxation; Robust estimators; Panel data;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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