Growth and Government: Is there a Difference between Developed and Developing Countries?

Tove Strauss
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Tove Strauss: Dept. of Economics, Stockholm School of Economics, Postal: P.O. Box 6501, SE-113 83 Stockholm, Sweden

No 275, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: We examine the role of government for growth in 64 industrialized and developing countries, considering both expenditure and financing aspects of government. Recognizing that there are differences between the two country groups leading to severe heteroskedasticity, we use weighted least squared estimations. The general conclusion is that the means of financing matters more for growth than do government spending. We find that seigniorage and budget surplus are important for growth in LDCs but not in industrialized countries, while capital revenue matters only in the latter group. Moreover, the level of indebtedness is a negative determinant of growth in LDCs.

Keywords: Growth; government; public expenditure; public financing. (search for similar items in EconPapers)
JEL-codes: C21 E62 H63 O40 (search for similar items in EconPapers)
Pages: 35 pages
Date: 1998-10-23
New Economics Papers: this item is included in nep-env and nep-tid
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