Asymmetries in the Growth of Governments

Gabriella Legrenzi (g.d.legrenzi@keele.ac.uk)

No KERP 2005/03, Keele Economics Research Papers from Centre for Economic Research, Keele University

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.

Keywords: Government spending; economic growth; automatic and discretionary fiscal policy. (search for similar items in EconPapers)
JEL-codes: C32 C51 C52 H20 H50 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2005-03
New Economics Papers: this item is included in nep-pbe
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