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The Effect Of Government Size On Economic Growth: Evidence From Gross State Product Data

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  • Garey Durden

    (Appalachian State University)

  • Barry Elledge

    (Appalachian State University)

Abstract

Using newly released data from the Bureau of Economic Analysis, this paper provides empirical estimates of the effect of government employment on gross state product. Cross-sectional data from 1982 are combined with a simple growth model to show that higher levels of government employment generally have a positive and significant effect on gross state product, with state and local employment levels having apparently greater influence. A first-differences variant of the model supports the cross-sectional findings. However, the positive influence of absolute government size may be offset by a negative relationship between GSP growth and the relative size of government.

Suggested Citation

  • Garey Durden & Barry Elledge, 1993. "The Effect Of Government Size On Economic Growth: Evidence From Gross State Product Data," The Review of Regional Studies, Southern Regional Science Association, vol. 23(2), pages 183-190, Fall.
    • Handle: RePEc:rre:publsh:v23:y:1993:i:2:p:183-190
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    References listed on IDEAS

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    1. Singh, Ram D, 1992. "Government-Introduced Price Distortions and Growth: Evidence from Twenty-Nine Developing Countries," Public Choice, Springer, vol. 73(1), pages 83-99, January.
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    Cited by:

    1. Burton A. Abrams & Margaret Z. Clarke & Russell F. Settle, 1999. "The Impact of Banking and Fiscal Policies on State‐Level Economic Growth," Southern Economic Journal, John Wiley & Sons, vol. 66(2), pages 367-378, October.
    2. 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.
    3. 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.
    4. 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.
    5. Bruce R. Domazlicky, 1996. "Government Size And Regional Economic Growth:Another Look," The Review of Regional Studies, Southern Regional Science Association, vol. 26(1), pages 89-97, Summer.
    6. 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.
    7. Celal Kucuker, 2003. "Türkiye Ýktisat Kongresi Büyüme Stratejileri Çalýþma Grubu," Working Papers 2003/5, Turkish Economic Association.

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