Interdependence of Government Expenditure among European Countries: Productivity Spillover and Strategic Interaction

Xiaodong Chen, Haoming Mi and Peng Zhou
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Xiaodong Chen: Jinhe Center for Economic Research, Xi’an Jiaotong University, China
Haoming Mi: Jinhe Center for Economic Research, Xi’an Jiaotong University, China

No E2025/15, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: An endogenous-growth model separating productive and welfare outlays is embedded in a spatial panel for 30 EU countries (1995–2021). Productive spending yields positive domestic and cross-country growth effects; welfare expenditure shows strategic interaction, leading to under-investment in growth-enhancing programmes.

Keywords: Fiscal interdependence; Productivity spillover; Spatial panel (search for similar items in EconPapers)
JEL-codes: E62 R58 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2025-07
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