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Fiscal Policy and Economic Development

  • Alexandros Mourmouras
  • Peter Rangazas

    ()

    (Department of Economics, Indiana Unviersity-Purdue University Indianapolis)

This paper offers possible explanations for three generally observed facts about fiscal policy and development: (F1) The relative size of government increases as an economy develops, (F2) The rise in government and taxation are associated with rising or constant economic growth rates, and (F3) Today’s developing countries have larger government sectors than did today’s developed countries at similar stages of development. The explanations for these facts are based on the structural transformation from traditional to modern production, rising public infrastructure investment, and less democratic governments in many of today’s developing economies.

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File URL: http://www.iupui.edu/~econ/workingpapers/wp200802.pdf
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Paper provided by Indiana University-Purdue University Indianapolis, Department of Economics in its series Working Papers with number wp200802.

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Length: 49 pages
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:iup:wpaper:wp200802
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