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The Shifting Scully Curve: International Evidence from 1870 to 2013

Livio Di Matteo and Fraser Summerfield ()

Working Paper series from Rimini Centre for Economic Analysis

Abstract: Scully curve predictions for growth-maximizing public sector size are estimated using panel data covering 17 industrialized nations from 1870-2013. Fixed-effects regression models find that government expenditure to GDP ratios between 27-32% are growth maximizing. The economic growth maximizing size shifted over time ranging from 9% pre-WWI to 25% Post WWII with less precise estimates suggesting 30% during inter-war years. A flattening out of the Scully curve occurs after the mid 1970s with the exception of the Nordic countries, which drive up government size considerably. As well, IV estimates of the Scully relationship suggest that the Scully curve may be subject to some reverse causality.

Keywords: Scully Curve; Public Sector Size; Economic Growth (search for similar items in EconPapers)
JEL-codes: E62 H50 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-gro, nep-his and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:18-01

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