GOVERNMENT EXPENDITURES COMPOSITION AND GROWTH IN EU15: A DYNAMIC HETEROGENEOUS APPROACH

Lena MALE?EVI? Perovi? () and Silvia Golem
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Lena MALE?EVI? Perovi?: Associate professor University of Split, Faculty of Economics, Business and Tourism, CERGE EI Teaching Fellow Cvite Fiskovi?a 5, 21000 Split, Croatia, Tel: + 385 21 430 683, Fax: + 385 21 430 701
Authors registered in the RePEc Author Service: Lena Malesevic Perovic

Regional Science Inquiry, 2019, vol. XI, issue 1, 95-105

Abstract: The goal of this paper is to investigate the long-run effect of government size and composition on growth in EU15 countries during 1995-2014. Unlike previous studies, this paper employs a more adequate and sophisticated econometric technique which allows the joint occurrence of dynamics and parameter heterogeneity as well as addresses the problem of unobserved common factors. The obtained results indicate that high aggregate spending levels are an impediment for growth in developed economies, while the single most important government expenditure item is education. In quantitative terms the impact of education expenditures is, however, significantly lower than that found by other papers.

Keywords: government size; expenditures composition; GDP growth; heterogeneity; unobserved common effects; EU15 (search for similar items in EconPapers)
JEL-codes: C23 H1 H50 O4 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:hrs:journl:v:xi:y:2019:i:1:p:95-105

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