The impact of government size on economic growth: A threshold analysis

Stylianos Asimakopoulos and Yiannis Karavias

Economics Letters, 2016, vol. 139, issue C, 65-68

Abstract: We examine the nature of the relationship between government size and economic growth and identify the optimal level of government size using a large dataset through a novel and very general non-linear panel Generalized Method of Moments approach. We show that this relationship is statistically significant above and below the optimal level, even after splitting our sample to developed and developing countries. Finally, we find an asymmetric impact of government size on economic growth in both developed and developing countries around the estimated threshold.

Keywords: Government size; Economic growth; Dynamic threshold estimation (search for similar items in EconPapers)
JEL-codes: C23 E62 O11 O50 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (68)

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Working Paper: The impact of government size on economic growth: a threshold analysis (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:139:y:2016:i:c:p:65-68

DOI: 10.1016/j.econlet.2015.12.010

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