Is There Any Race to the Top of Productive Government Expenditures? Evidence from OECD Countries (1970-1997)

Ismael Sanz

European Political Economy Review, 2005, vol. 3, issue Winter, 29-52

Abstract: This paper evaluates whether there has been any convergence in government expenditures. The results obtained, by means of the Tukey box-plot, sigma-convergence and conditional beta-convergence, reveal that there is a growing fiscal interdependence among OECD countries. I argue that there is strong evidence of a Òrace to the topÓ of government productive expenditures among OECD countries during the period 1970-1997. The econometric analysis shows that aggregate OECD productive expenditures have pressured countries to increase their own levels of productive expenditures, which might be indicating a competition to attract FDI. In contrast, there is no evidence of convergence in non-productive government expenditures.

Keywords: Composition of government expenditure; convergence; economic integration; OECD (search for similar items in EconPapers)
JEL-codes: F53 H72 P44 P45 P51 (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:epe:journl:v:3:y:2005-2006:i:winter:p:29-52

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