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The Scope of Government and its Impact on Economic Growth in OECD Countries

Bernhard Heitger

No 1034, Kiel Working Papers from Kiel Institute for the World Economy (IfW)

Abstract: This paper investigates the relationship between the size of government and economic growth in OECD countries in 1960?2000. The underlying idea is that government expenditures on public goods basically have a positive effect on growth, but this growth effect tends to decline or even reverse when government is overdoing, e.g. by increasing expenditures in such a way that it ultimately also provides private goods. Empirical analyses based on panel estimates for 21 OECD countries support this hypothesis: Total government expenditures as well as expenditures by type indicate a significant negative impact on economic growth (excepting transfers and public investments).

Keywords: Government expenditure; taxation and economic growth (search for similar items in EconPapers)
JEL-codes: H1 H2 O4 (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1034

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