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Government Transfers and Growth: Is there Evidence of Genuine Effect?

Sefa Awaworyi and Siew Ling Yew

No 40-14, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper investigates how government transfers affect economic growth. Using meta-analysis techniques, we systematically review 24 primary studies with 164 estimates that examine the effect of government transfers on economic growth. After addressing heterogeneity and issues of publication bias in the existing literature, we find a negative association between government transfers and growth. This negative growth impact of government transfers also holds for developed countries. Meta-regression results also reveal that the effect size of reported estimates largely depends on individual study characteristics. In particular, data time period, measure of government transfers, econometric specification and underlying theoretical models are important factors that explain the variations in the empirical results.

Keywords: Transfers; Welfare policy; Social security; Taxes; Economic growth (search for similar items in EconPapers)
JEL-codes: I38 H53 H55 O47 E62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fdg and nep-gro
Date: 2014-09
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