Government size and economic growth:A review of international literature

Sheilla Nyasha and Nicholas Odhiambo

No 25740, Working Papers from University of South Africa, Department of Economics

Abstract: In this paper, we survey the existing literature on the causal relationship between government sizeand economic growth, highlighting the theoretical and empirical evidence from topical work.Although some previous studies have endeavoured to conduct a survey on the existing research onthe causal relationship between government size and economic growth, the majority of thesestudies have focused on the impact of the two macroeconomic variables and failed to providecoverage on the causality aspect of their relationship. To our knowledge, this may well be the firststudy of its kind to survey, in detail, the existing literature on the causal relationship betweengovernment size and economic growth ? in all the countries, whether developing or developed. Byand large, our study shows that direction of causality between these two variables has fourpossible outcomes; and that all the outcomes have found empirical support, based on variationsin the country or region under study, methodology, proxies, data set used and time frameconsidered. However, of the four, the most prominent is the second view, which validatesunidirectional Granger-causality from economic growth to government size, followed by thebidirectional Granger-causality category. The study, therefore, concludes that the causalrelationship between government size and economic growth is not clear-cut.

Keywords: Government Size; Government Expenditure; Economic Growth; Granger-Causality (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://uir.unisa.ac.za/bitstream/handle/10500/2574 ... nal%20literature.pdf (application/pdf)

Related works:
Journal Article: Government Size and Economic Growth: A Review of International Literature (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uza:wpaper:25740

Access Statistics for this paper

More papers in Working Papers from University of South Africa, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Shaun Donovan ().