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Growth and the Public Sector: A Critique of the Critics

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Author Info
Folster, S.
Henrekson, M.

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Abstract

In a recent review article Jonas Agell, Thomas Lindh and Henry Ohlsson (1997) claim that theoretical and empirical evidence does not allow any conclusion on whether there is a relationship between the rate of economic growth and the size of the public sector. They illustrate their conclusion with simple cross-country regressions where the relation between growth and public expenditure tilts from negative to positive when control variables are introduced. In our article we argue that Agell, Lindh and Ohlsson base their conclusions on empirical studies, and on their own regressions, that suffer from econometric problems.

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Publisher Info
Paper provided by Research Institute of Industrial Economics (IFN) in its series Research Institute of Industrial Economics Working Papers with number 492.

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Length: 23 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:fth:iniesr:492

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Related research
Keywords: ECONOMIC GROWTH ; TAXATION ; PUBLIC SECTOR;

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Find related papers by JEL classification:
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

References listed on IDEAS
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