Government Size, Fiscal Policy and the Level and Growth of Output: A Review of Recent Evidence

Norman Gemmell and Joey Au

No 18755, Working Paper Series from Victoria University of Wellington, Chair in Public Finance

Abstract: Theoretical developments, improved methodologies and more extensive data have helped generate a dramatic increase in the literature testing for the impact of government size and fiscal policy on economic growth in recent years. We review a range of the more recent evidence and examine (1) the consistency or robustness of the results; (2) how these results differ from the earlier literature and (3) their usefulness as a guide to policy reform in practice. We find that the last decade has produced more robust evidence and more plausible orders of magnitude on the impact of fiscal policy on growth. However, the value of this evidence remains limited as a basis for quantifying macroeconomic responses to fiscal policy reform in practice.

Keywords: fiscal policy; government expenditure; taxation; economic growth (search for similar items in EconPapers)
Date: 2012
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https://ir.wgtn.ac.nz/handle/123456789/18755

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Journal Article: Government size, fiscal policy and the level and growth of output: a review of recent evidence (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcpf:18755

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