Economic growth and budgetary components - a panel assessment for the EU

Antonio Afonso and Juan González Alegre ()
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Juan González Alegre: European University Institute, Via della Piazzuola, 43, I-50133, Firenze, Italy., http://www.eui.eu/Home.aspx

No 848, Working Paper Series from European Central Bank

Abstract: In this paper we test whether a reallocation of government budget items can enhance long-term GDP growth in a set of European countries. We apply modern panel data techniques to the period 1970-2006, and we use three alternative dependent variables in a growth regression: economic growth, total factor productivity and labour productivity. Our results are able to identify also the distortions induced by public expenditure in the private factors allocation. In particular, we detect a strong crowding-in effect associated to public investment, which have enhanced economic growth by boosting private investment. We also associate a significant dependence of productivity on public expenditure on education as well as the role of social security and health issues in growth and the labour market. JEL Classification: C23, E62, H50, O40.

Keywords: Economic growth; panel models; fiscal policy. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2008-01
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Related works:
Working Paper: Economic Growth and Budgetary Components: a Panel Assessment for the EU (2007)
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