The size and growth of government spending
This paper reviews the size and growth of government spending. Section I surveys the empirical evidence on the growth of government expenditures. First, a number of measurement issues are raised, including the definition of the public sector, the appearance of off-budget expenditures, and the use of price deflators for government output. Section I then reviews available data on government expenditures for OECD and developing nations. Both a long term perspective, provided by several OECD economies, and contemporary experience, essentially since 1960, are presented. In Section II, the determinants of the growth in government are considered. This literature covers demographic demands for expenditure growth, the changing relative prices of public vis-a-vis private goods, the income elasticity of public goods, and the arguments of the public choice school. Most of these explanations have been directed at understanding trends in industrialized nations, and little has been written on the relevance of these explanations for developing nations. This section briefly speculates on the determinants of government growth in developing countries against the backdrop provided by results in the advanced economies.
|Date of creation:||30 Sep 1988|
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