A Case for Higher Public Spending

Yew-Kwang Ng () and Siang Ng

Chapter 8 in Efficiency, Equality and Public Policy, 2000, pp 105-123 from Palgrave Macmillan

Abstract: Abstract Saunders (1993) shows that the share of public expenditure reached a peak in most countries in early to mid-1980s, stabilised and then declined. (See also Bohl, 1996 and Payne and Ewing, 1996 on international evidence on the Wagner’s law on the increase in the share of the public sector.) The decline is sharper in terms of the real size of the public sector due to a higher relative price; see the end of Section 8.2 below. This decline is associated with the worldwide movement towards privatisation and the use of the market mechanism. While accepting that there are some valid reasons (such as the inefficiency of the public sector) underlying this movement, this chapter discusses some neglected factors that provide some offsetting considerations. Before doing so, the basic theory on the appropriate size of public spending on public goods and some related considerations are reviewed.

Keywords: Public Sector; Public Good; Marginal Cost; Public Expenditure; Government Spending (search for similar items in EconPapers)
Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-333-99277-7_8

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DOI: 10.1057/9780333992777_8

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