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Public Expenditure and Economic Growth: Empirical Evidence for the EU

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  • Francisco J. Delgado

Abstract

The relationship between government size and economic growth is a major task in the economic literature and this paper is devoted to public expenditure. We empirically study the relationship between public expenditure and economic growth in the European Union. Our approach consists on a quantile regression for the period 2004-2019. The results show a negative and significant impact of total public expenditure on economic growth, with a higher effect in the high tail of the growth distribution. In a more detailed analysis, the study of three large public expenditures, considering the percentage of total public expense, reveals an insignificant effect of health, and a negative impact of education and social protection, higher in the low tail of the growth distribution. Our findings allow better understanding of the effects of public policies on development beyond linear approaches.

Suggested Citation

  • Francisco J. Delgado, 2023. "Public Expenditure and Economic Growth: Empirical Evidence for the EU," Politická ekonomie, Prague University of Economics and Business, vol. 2023(6), pages 709-729.
    • Handle: RePEc:prg:jnlpol:v:2023:y:2023:i:6:id:1406:p:709-729
    DOI: 10.18267/j.polek.1406
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    1. Levine, Ross & Zervos, Sara J, 1993. "What We Have Learned about Policy and Growth from Cross-Country Regressions?," American Economic Review, American Economic Association, vol. 83(2), pages 426-430, May.
    2. Tove Strauss, 2001. "Growth and government: Is there a difference between developed and developing countries?," Economics of Governance, Springer, vol. 2(2), pages 135-157, July.
    3. Svetlana Sokolov-Mladenović & Slobodan Cvetanović & Igor Mladenović, 2016. "R&D expenditure and economic growth: EU28 evidence for the period 2002–2012," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 29(1), pages 1005-1020, January.
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    More about this item

    Keywords

    Public expenditure; growth; European Union; quantile regression;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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