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Asymmetries in the Growth of Governments

Author

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  • Gabriella Legrenzi

    () (Keele University, Department of Economics)

Abstract

The growth of governments has traditionally been modelled within a welfare-driven context, where citizens/taxpayers increase their demand for publicly-provided goods and services in response to economic growth. However, the underlying linear approach does not consider the crisis intervention function of government spending that increases following contractions, rather than expansions, in domestic income. Our results point to a consistent counter-cyclical use of non-systematic government consumption expenditure.We also provide evidence of an upward bias in both discretionary and non-systematic government spending that can help explain the relevant growth of the Italian public sector.

Suggested Citation

  • Gabriella Legrenzi, 2005. "Asymmetries in the Growth of Governments," Keele Economics Research Papers KERP 2005/03, Centre for Economic Research, Keele University.
  • Handle: RePEc:kee:kerpuk:2005/03
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    File URL: http://www.keele.ac.uk/depts/ec/wpapers/kerp0503.pdf
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    Keywords

    Government spending; economic growth; automatic and discretionary fiscal policy.;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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