Institutions and the Impact of Government Spending on Growth

James L. Butkiewicz () and Halit Yanıkkaya ()

No 08-23, Working Papers from University of Delaware, Department of Economics

Abstract: This paper reports the results of a study of the impact of government expenditures on economic growth, emphasizing how government effectiveness in developing nations influences the productivity of government spending. The effects of categories of government spending on growth are also examined. No significant positive effects are found for defense, education and health variables. Consumption expenditures have negative growth effects in developed and developing nations, with a more detrimental impact in developing nations with ineffective governments. Developing nations with ineffective governments benefit from capital expenditures. To stimulate growth, developing nations should limit their governments’ consumption spending and invest in infrastructure.

Keywords: Government spending; Institutional Quality; Economic Growth (search for similar items in EconPapers)
JEL-codes: O33 R11 O47 O55 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa and nep-dev
Date: 2008

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Persistent link: http://EconPapers.repec.org/RePEc:dlw:wpaper:08-23.

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