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Government Size and Economic Growth in Italy: An Empirical Analyses Based On New Data (1861-2008)

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  • Cosimo Magazzino

Abstract

The aim of this paper is to empirically assess the relationship between government size and economic growth. Using time series methodologies applied to annual data for Italy, the effect public expenditure, unemployment and fiscal reforms on economic activity have been analysed. The data used in these analyses have been collected and shown in Forte (2011), and they cover the very long-period 1861-2011. Our results show the presence of a non-linear relationship between the size of public sector (measured by the share of government expenditure over GDP) and the economic growth rate for Italy. In general, the presence of an inverted “U-shape†curve emerges for the last two decades, suggesting that expenditure cuts might faster GDP dynamic. This result is in line with recent empirical literature about this issue. Interestingly, for the monarchic years, it has been found that the zero budget constraint provoked a slower aggregate income variation.

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  • Cosimo Magazzino, 2014. "Government Size and Economic Growth in Italy: An Empirical Analyses Based On New Data (1861-2008)," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 3(2), pages 38-54.
    • Handle: RePEc:rss:jnljef:v3i2p1
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    Cited by:

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    5. Emilian DOBRESCU, 2016. "Controversies over the Size of the Public Budget," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 5-34, December.
    6. Olaoye, Olumide O. & Eluwole, Oluwatosin O. & Ayesha, Aziz & Afolabi, Olugbenga O., 2020. "Government spending and economic growth in ECOWAS: An asymmetric analysis," The Journal of Economic Asymmetries, Elsevier, vol. 22(C).
    7. Gordon L. Brady & Cosimo Magazzino, 2019. "Government Expenditures and Revenues in Italy in a Long-run Perspective," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(2), pages 361-375, June.
    8. Olumide Olusegun Olaoye & Mosab I. Tabash & Olatunde Julius Omokanmi & Rotimi Ayoade Ogunjumo & Matthew Oyeleke Ojelade & James A. Ishola, 2022. "Macroeconomic implications of escalating stock of public debt: Evidence from sub‐Saharan African economies," African Development Review, African Development Bank, vol. 34(4), pages 527-540, December.
    9. Gordon L. Brady & Cosimo Magazzino, 2017. "The Sustainability of Italian Public Debt and Deficit," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 23(1), pages 9-20, February.

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