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The Scope of Government and its Impact on Economic Growth in OECD Countries

  • Bernhard Heitger
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    This paper investigates the relationship between the size of government and economic growth in OECD countries in 1960–2000. The underlying idea is that government expenditures on public goods basically have a positive effect on growth, but this growth effect tends to decline or even reverse when government is overdoing, e.g. by increasing expenditures in such a way that it ultimately also provides private goods. Empirical analyses based on panel estimates for 21 OECD countries support this hypothesis: Total government expenditures as well as expenditures by type indicate a significant negative impact on economic growth (excepting transfers and public investments).

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    File URL: https://www.ifw-members.ifw-kiel.de/publications/the-scope-of-government-and-its-impact-on-economic-growth-in-oecd-countries/kap1034.pdf
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    Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1034.

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    Length: 32 pages
    Date of creation: Apr 2001
    Date of revision:
    Handle: RePEc:kie:kieliw:1034
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    1. de la Fuente, Angel & Doménech, Rafael, 2000. "Human Capital In Growth Regressions: How Much Difference Does Data Quality Make?," CEPR Discussion Papers 2466, C.E.P.R. Discussion Papers.
    2. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
    3. Assar Lindbeck, 1997. "The Swedish Experiment," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1273-1319, September.
    4. James Gwartney & Randal Holcombe & Robert Lawson, 1998. "The Scope of Government and the Wealth of Nations," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 163-190, Fall.
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