Does the Composition of Government Expenditure Matter for Long-run GDP Levels?

Norman Gemmell, Richard Kneller and Ismael Sanz

No 18845, Working Paper Series from Victoria University of Wellington, Chair in Public Finance

Abstract: We examine the long-run GDP impacts of changes in total government expenditure and in the shares of different spending categories for a sample of OECD countries since the 1970s, taking account of methods of financing expenditure changes and possible endogenous relationships. We provide more systematic empirical evidence than available hitherto for OECD countries. Our results provide strong evidence that reallocating total spending towards infrastructure and education would be positive for long-run income levels. Increasing the share of social welfare spending (and away from all others pro-rata) may be associated with, at most, modestly lower long-run GDP levels.

Keywords: Government expenditure composition; Fiscal policy; GDP (search for similar items in EconPapers)
Date: 2014
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https://ir.wgtn.ac.nz/handle/123456789/18845

Related works:
Journal Article: Does the Composition of Government Expenditure Matter for Long-Run GDP Levels? (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcpf:18845

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