The Growth of Public Expenditure in the Italian Theory of Public Finance

Giuseppe Mastromatteo

Il Pensiero Economico Italiano, 2003, vol. 11, issue 1, 221-242

Abstract: It emerges from this study that even if evaluations concerning the determinants of public expenditure growth are discordant, almost all scholars recognise at the international level that public expenditure has risen gradually since the middle of the nineteenth century. In seeking to investigate the causes that underlie the growing role of the State in the economy, Italian scholars agree with Wagner in highlighting both the heterogeneity and the interaction among the economic, political and technological variables. Consequently, there is general agreement among these authors, in line the with present-day literature, that the phenomenon cannot easily be explained by any one single cause. In the contributions examined, attention is paid not only to the assumptions of the marginalist school but also to the socio-political setting. In the marginalist framework, individual preferences (hedonistic calculation) remain the final point of reference independently of the means adopted to solve the problems of fiscal policies. With regard to the socio-political setting, attention is drawn to the manner in which the insurmountable limit of an individual’s refusal to accept a high tax burden can be overcome with deficit financing of the public debt, the latter being understood as a means for increasing expenditure without exceeding, at least in appearance, the individual tax tolerance threshold. Within this theoretical framework, some interesting and still highly relevant interpretations of public expenditure growth have been put forward. These include Pantaleoni’s “law” of the economies of scale, the theory of unbalanced growth in the public sector and the mix of public and private needs (Graziani and Sitta), the correlation with economic development quantifiable in the increase of income and wealth (G. Ricca Salerno, Conigliani) as well as the concept of financial illusion and the mechanism of recourse to the public debt (Puviani, Barone, Einaudi).

Keywords: Public expenditure growth; Italian tradition of public finance (search for similar items in EconPapers)
JEL-codes: B13 E62 (search for similar items in EconPapers)
Date: 2003
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