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Public Expenditure Dynamics In Spain: A Simplified Model Of Its Determinants

  • Manuel Jaén García

    (Universidad de Almería)

  • Luis Palma Martos

    (Universidad de Sevilla)

. Public expenditure increase is explained by very diverse models. There are very simplified models, even though some have a strong theoretical background (e.g. Wagner's Law or the Displacement Effect), and others based on empirical rather than theoretical aspects. In an intermediate position, there are models of determinants of public expenditure from the demand and supply perspectives. In both cases we base our study on multivariant models that express public expenditure as a variable which depends on many factors. However, while demand models are strongly supported by the theory (model) of the median voter (Borcherding and Deacon, 1972 and Bergstrom and Goodman, 1973), supply models are based on a simple Cobb-Douglas equation. It would be highly interesting to synthesize both kinds of influence. However, the design of this model and its empirical contrast is most complex due to the high number of variables that should be included which would lead to serious problems of endogeneity and multicollinearity. Also, the existence of very limited statistical data would to lead an important lack of degrees of freedom.

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Paper provided by Instituto de Estudios Fiscales in its series Working Papers with number 9-04 Classification-JEL :.

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Handle: RePEc:hpe:wpaper:y:2004:i:9
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  1. Miguel Ángel López García, . "La Vivienda Y La Reforma Fiscal De 1998: Un Ejercicio De Simulación(*)," Working Papers 7-04 Classification-JEL :, Instituto de Estudios Fiscales.
  2. Borcherding, Thomas E., 1985. "The causes of government expenditure growth: A survey of the U.S. evidence," Journal of Public Economics, Elsevier, vol. 28(3), pages 359-382, December.
  3. Romer, Thomas & Rosenthal, Howard, 1979. "Bureaucrats versus Voters: On the Political Economy of Resource Allocation by Direct Democracy," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 563-87, November.
  4. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-96, June.
  5. Allan Meltzer & Scott Richard, 1983. "Tests of a rational theory of the size of government," Public Choice, Springer, vol. 41(3), pages 403-418, January.
  6. A. Dale Tussing & John A. Henning, 1974. "Long-Run Growth of Nondefense Government Expenditures in the United States," Public Finance Review, , vol. 2(2), pages 202-222, April.
  7. Pommerehne, Werner W & Schneider, Friedrich, 1978. "Fiscal Illusion, Political Institutions, and Local Public Spending," Kyklos, Wiley Blackwell, vol. 31(3), pages 381-408.
  8. Gemmell, Norman, 1990. "Public employees' preferences and the size of the public sector," Journal of Economic Behavior & Organization, Elsevier, vol. 14(3), pages 393-402, December.
  9. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
  10. Thomas Romer & Howard Rosenthal, 1978. "Political resource allocation, controlled agendas, and the status quo," Public Choice, Springer, vol. 33(4), pages 27-43, December.
  11. James Kau & Paul Rubin, 1981. "The size of government," Public Choice, Springer, vol. 37(2), pages 261-274, January.
  12. José María Arranz & Carlos García-Serrano, . "¿Qué Ha Sucedido Con La Estabilidad Del Empleo En España?. Un Análisis Desagregado Con Datos De La Epa: 1987-2003(*)," Working Papers 4-04 Classification-JEL :, Instituto de Estudios Fiscales.
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