IDEAS home Printed from https://ideas.repec.org/a/eej/eeconj/v19y1993i3p321-328.html
   My bibliography  Save this article

The Effect of Government Size on Economic Growth

Author

Listed:
  • Edmund J. Sheehey

    (Agnes Scott College)

Abstract

This paper tests the hypothesis that the impact of government expenditures on growth is initially positive but becomes weaker or even negative beyond some threshold of government size or level of development. The author's cross-country regression results support this proposition in that the impact of changes in government size is positive and significant both for low income countries and for countries with a low share of government expenditures in GDP while being negative for countries with a high share for government expenditures and negative and significant for high income countries.

Suggested Citation

  • Edmund J. Sheehey, 1993. "The Effect of Government Size on Economic Growth," Eastern Economic Journal, Eastern Economic Association, vol. 19(3), pages 321-328, Summer.
    • Handle: RePEc:eej:eeconj:v:19:y:1993:i:3:p:321-328
    as

    Download full text from publisher

    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume19/V19N3P321_328.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Levine, Ross & Renelt, David, 1991. "Cross-country studies of growth and policy : methodological, conceptual, and statistical problems," Policy Research Working Paper Series 608, The World Bank.
    2. Ram, Rati, 1986. "Government Size and Economic Growth: A New Framework and Some Evidencefrom Cross-Section and Time-Series Data," American Economic Review, American Economic Association, vol. 76(1), pages 191-203, March.
    3. Saunders, Peter, 1985. "Public Expenditure and Economic Performance in OECD Countries," Journal of Public Policy, Cambridge University Press, vol. 5(1), pages 1-21, February.
    4. Grossman, Philip J, 1990. "Government and Growth: Cross-sectional Evidence," Public Choice, Springer, vol. 65(3), pages 217-227, June.
    5. Kormendi, Roger C. & Meguire, Philip G., 1985. "Macroeconomic determinants of growth: Cross-country evidence," Journal of Monetary Economics, Elsevier, vol. 16(2), pages 141-163, September.
    6. International Monetary Fund, 1989. "Government Expenditure and Economic Growth: An Empirical Investigation," IMF Working Papers 1989/045, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    2. Poot, Jacques, 1999. "A meta-analytic study of the role of government in long-run economic growth," ERSA conference papers ersa99pa171, European Regional Science Association.
    3. Peter Nijkamp & Jacques Poot, Victoria, 2002. "Meta-Analysis of the Impact of Fiscal Policies on Long-Run Growth," Tinbergen Institute Discussion Papers 02-028/3, Tinbergen Institute, revised 23 Apr 2003.
    4. Nijkamp, Peter & Poot, Jacques, 2004. "Meta-analysis of the effect of fiscal policies on long-run growth," European Journal of Political Economy, Elsevier, vol. 20(1), pages 91-124, March.
    5. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, vol. 31(C), pages 1-14.
    6. Facchini, François & Melki, Mickaël, 2013. "Efficient government size: France in the 20th century," European Journal of Political Economy, Elsevier, vol. 31(C), pages 1-14.
    7. Agell, Jonas & Lindh, Thomas & Ohlsson, Henry, 1997. "Growth and the public sector: A critical review essay," European Journal of Political Economy, Elsevier, vol. 13(1), pages 33-52, February.
    8. Serhan Cevik & John Ricco, 2018. "No buck for the bang: revisiting the military-growth nexus," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(4), pages 639-653, November.
    9. Arawatari, Ryo & Hori, Takeo & Mino, Kazuo, 2023. "Government expenditure and economic growth: A heterogeneous-agents approach," Journal of Macroeconomics, Elsevier, vol. 75(C).
    10. World Bank, 2009. "Seychelles - Public Expenditure Review," World Bank Publications - Reports 3089, The World Bank Group.
    11. Hüseyin Şen & Ayşe Kaya & Ayşegül Durucan, 2023. "New insights into the growth-maximizing size of government: evidence and implications for Turkey," Economic Change and Restructuring, Springer, vol. 56(4), pages 2243-2296, August.
    12. Ferris, J. Stephen & Voia, Marcel C., 2015. "The effect of federal government size on private economic performance in Canada: 1870–2011," Economic Modelling, Elsevier, vol. 49(C), pages 172-185.
    13. Mohtadi, Hamid & Roe, Terry L., 2003. "Democracy, rent seeking, public spending and growth," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 445-466, March.
    14. Celal Kucuker, 2003. "Türkiye Ýktisat Kongresi Büyüme Stratejileri Çalýþma Grubu," Working Papers 2003/5, Turkish Economic Association.
    15. Azam, Jean-Paul & Guillaumont, Sylviane, 1988. "Methodological problems in cross-country analyses of economic growth," Policy Research Working Paper Series 22, The World Bank.
    16. Wahab, Mahmoud, 2011. "Asymmetric output growth effects of government spending: Cross-sectional and panel data evidence," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 574-590, October.
    17. N Bose & M E Haque & D R Osborn, 2003. "Public Expenditure and Growth in Developing Countries: Education is the Key," Centre for Growth and Business Cycle Research Discussion Paper Series 30, Economics, The University of Manchester.
    18. Margit Schratzenstaller, 2007. "WIFO-Weißbuch: Wachstumsimpulse durch die öffentliche Hand," WIFO Monatsberichte (monthly reports), WIFO, vol. 80(6), pages 509-526, June.
    19. Philip Arestis & Hüseyin Şen & Ayşe Kaya, 2021. "On the linkage between government expenditure and output: empirics of the Keynesian view versus Wagner’s law," Economic Change and Restructuring, Springer, vol. 54(2), pages 265-303, May.
    20. Dimitrios Paparas & Christian Richter, 2015. "Fiscal policy and economic growth: Empirical evidence from the European Union," Working Papers 2015.06, International Network for Economic Research - INFER.

    More about this item

    Keywords

    Economic Growth; Government; Growth;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eej:eeconj:v:19:y:1993:i:3:p:321-328. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Victor Matheson, College of the Holy Cross (email available below). General contact details of provider: https://edirc.repec.org/data/eeaa1ea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.