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Government Size versus Government Efficiency in a Model of Economic Growth

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  • Francisca Guedes de Oliveira

    (Católica Porto Business School, Portugal)

Abstract

We develop a Solow type growth model where firms produce a single homogenous good using labor, private capital and a public good. The "amount" of public good depends on current government spending and government quality. Quality is the result of the accumulation of public capital. Governments charge distortionary taxes and provide the public good, investing also in "quality" by accumulating public capital. We analyze how the composition of government spending between current expenditures and quality affects the equilibrium levels. We aim to understand the difference in terms of steady state levels between leviathan, quality driven and benevolent governments.

Suggested Citation

  • Francisca Guedes de Oliveira, 2016. "Government Size versus Government Efficiency in a Model of Economic Growth," Eurasian Journal of Social Sciences, Eurasian Publications, vol. 4(2), pages 38-55.
    • Handle: RePEc:ejn:ejssjr:v:4:y:2016:i:2:p:38-55
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    References listed on IDEAS

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    7. Gregoriou, Andros & Ghosh, Sugata, 2009. "On the heterogeneous impact of public capital and current spending on growth across nations," Economics Letters, Elsevier, vol. 105(1), pages 32-35, October.
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    10. Francisca Guedes de Oliveira, 2012. "Empirical Determinants of Government Efficiency: A study Based on Objective Indicators," Working Papers de Economia (Economics Working Papers) 03, Católica Porto Business School, Universidade Católica Portuguesa.
    11. Isham, Jonathan & Kaufmann, Daniel & Pritchett, Lant H, 1997. "Civil Liberties, Democracy, and the Performance of Government Projects," The World Bank Economic Review, World Bank, vol. 11(2), pages 219-242, May.
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    Cited by:

    1. Merter Mert, 2017. "Public Transportation Investments And Economic Growth In Turkey," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(2), pages 17-35.

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