Government size, composition, volatility and economic growth

Antonio Afonso and Davide Furceri ()

No 849, Working Paper Series from European Central Bank

Abstract: This paper analyses the effects in terms of size and volatility of government revenue and spending on growth in OECD and EU countries. The results of the paper suggest that both variables are detrimental to growth. In particular, looking more closely at the effect of each component of government revenue and spending, the results point out that i) indirect taxes (size and volatility); ii) social contributions (size and volatility); iii) government consumption (size and volatility); iv) subsidies (size); and v) government investment (volatility) have a sizeable, negative and statistically significant effect on growth. JEL Classification: E62, H50, O40.

Keywords: Fiscal policy; government size; fiscal volatility; economic growth. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-mac
Date: 2008-01
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Related works:
Working Paper: Government Size, Composition, Volatility and Economic Growth (2008)
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