Fiscal Policy and Economic Development

Alexandros Mourmouras and Peter Rangazas

Working Papers from Indiana University-Purdue University Indianapolis, Department of Economics

Abstract: This paper offers possible explanations for three generally observed facts about fiscal policy and development: (F1) The relative size of government increases as an economy develops, (F2) The rise in government and taxation are associated with rising or constant economic growth rates, and (F3) Today’s developing countries have larger government sectors than did today’s developed countries at similar stages of development. The explanations for these facts are based on the structural transformation from traditional to modern production, rising public infrastructure investment, and less democratic governments in many of today’s developing economies.

Keywords: Structural Transformation; Wagner’s Law (search for similar items in EconPapers)
JEL-codes: O11 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2008-02
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Related works:
Journal Article: FISCAL POLICY AND ECONOMIC DEVELOPMENT (2009)
Working Paper: Fiscal Policy and Economic Development (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:iup:wpaper:wp200802

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