Long swings in the growth of government expenditure: an international historical perspective

Marco Gallegati and Massimo Tamberi

Public Choice, 2022, vol. 192, issue 3, No 2, 227-248

Abstract: Abstract Adopting an international historical perspective, this study aims to identify the main empirical regularities in the long-run growth pattern of government expenditure. The application of parametric and non-parametric analyses to a sample of developed countries observed over the period 1880–2018 allows us to detect two main findings. The first is that, beyond the long-term growth of government expenditures in absolute terms, there is evidence for three expansionary long waves corresponding to the booms before and during the twentieth century’s two world wars, along with the ‘golden age of public sector intervention’. The latter refers to the decline in cross-country heterogeneity in the trends and composition of absolute growth of government expenditure since the 1960s. The ‘ratchet phenomenon’ in the pre-WWII period and the shift in ideological focus from market to government failures in the last decades of the twentieth century provide explanations that complement Wagner’s law and are consistent with the observed long-term evolution of the growth of government expenditure.

Keywords: Wagner’s law; Government expenditures; Local non-parametric regression analysis; Co-integration test; C14; C22; E60; H50; H60; N40 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Working Paper: LONG SWINGS IN THE GROWTH OF GOVERNMENT EXPENDITURE: AN INTERNATIONAL HISTORICAL PERSPECTIVE (2020)
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DOI: 10.1007/s11127-022-00979-1

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