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Is There Any Race to the Top of Productive Government Expenditures? Evidence from OECD Countries (1970-1997)

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  • Ismael Sanz

    (European Economy Group-Universidad Complutense de Madrid, Department of Applied Economics, Madrid)

Abstract

This paper evaluates whether there has been any convergence in government expenditures. The results obtained, by means of the Tukey box-plot, sigma-convergence and conditional beta-convergence, reveal that there is a growing fiscal interdependence among OECD countries. I argue that there is strong evidence of a Òrace to the topÓ of government productive expenditures among OECD countries during the period 1970-1997. The econometric analysis shows that aggregate OECD productive expenditures have pressured countries to increase their own levels of productive expenditures, which might be indicating a competition to attract FDI. In contrast, there is no evidence of convergence in non-productive government expenditures.

Suggested Citation

  • Ismael Sanz, 2005. "Is There Any Race to the Top of Productive Government Expenditures? Evidence from OECD Countries (1970-1997)," European Political Economy Review, European Political Economy Infrastructure Consortium, vol. 3(Winter), pages 29-52.
    • Handle: RePEc:epe:journl:v:3:y:2005-2006:i:winter:p:29-52
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    File URL: http://www.ugbs.org/weru/eper/vol3/no2/sanz.pdf
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    More about this item

    Keywords

    Composition of government expenditure; convergence; economic integration; OECD;
    All these keywords.

    JEL classification:

    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages
    • P44 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation

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