Optimum government size and economic growth in case of Indian states: Evidence from panel threshold model

Vaseem Akram and Badri Rath

Economic Modelling, 2020, vol. 88, issue C, 151-162

Abstract: This paper investigates the relationship between optimum government size and economic growth using data of Indian states during 1990-91 to 2017–18. Our results derived from panel threshold regression model show a positive and significant impact of government size on economic growth within the estimated thresholds for both aggregate and sub-panels based on income and regions. Once the government size moves above the upper threshold level, then its impact declines and turns to be insignificant. Thus, our findings suggest the policymakers for maintaining the government size within the thresholds limit.

Keywords: Economic growth; Optimum government size; Panel threshold regression; Indian states (search for similar items in EconPapers)
JEL-codes: C23 H72 O40 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:88:y:2020:i:c:p:151-162

DOI: 10.1016/j.econmod.2019.09.015

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