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Growth of Government Expenditure: The Case of Canada

Author

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  • Sohrab Abizadeh

    (University of Winnipeg)

  • Mahmood Yousefi

    (University of Northern Iowa)

Abstract

This article examines empirically the secular growth of federal government expenditure in Canada using both political and economic variables. The alternative hypotheses and related controversies surrounding the measurement of the size and growth of government are discussed and tested. The results indicate that, at least in the case of Canada, the use of real or nominal measures does not alter the conclusions. However, depending on whether exhaustive or nonexhaustive measures of the size of government are used, significantly different results are obtained. Our empirical results suggest that both political and economic factors have significantly affected the growth of government in Canada. Among economic variables, internationally induced economic changes, dependency ratio, rate of unemployment and the growth in real income stand out. Political variables support the hypothesis that the more “liberal†the leader of the party in power and the higher the percentage of liberals in the House, the larger will be the size of public spending, and vice versa.

Suggested Citation

  • Sohrab Abizadeh & Mahmood Yousefi, 1988. "Growth of Government Expenditure: The Case of Canada," Public Finance Review, , vol. 16(1), pages 78-100, January.
    • Handle: RePEc:sae:pubfin:v:16:y:1988:i:1:p:78-100
    DOI: 10.1177/109114218801600104
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    References listed on IDEAS

    as
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    8. Gandhi, Ved P, 1971. "Wagner's Law of Public Expenditure: Do Recent Cross-Section Studies Confirm it?," Public Finance = Finances publiques, , vol. 26(1), pages 44-56.
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    Cited by:

    1. Manuel Jaén García & Luis Palma Martos, "undated". "Public Expenditure Dynamics In Spain: A Simplified Model Of Its Determinants," Working Papers 9-04 Classification-JEL :, Instituto de Estudios Fiscales.
    2. Manuel Ja n-Garc a, 2017. "A Demand Determinants Model for Public Spending in Spain," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 372-386.
    3. François Petry & Louis Imbeau & Jean Crête & Michel Clavet, 2000. "Explaining the Evolution of Government Size in the Canadian Provinces," Public Finance Review, , vol. 28(1), pages 26-47, January.
    4. Ampah Isaac Kwesi & Kotosz Balázs, 2016. "Wagner versus Keynes: the causal nexus between Government Expenditures and Economic Growth: An Empirical study of Burkina Faso," Journal of Heterodox Economics, Sciendo, vol. 3(2), pages 74-101, December.
    5. François Pétry & Howard R. Harmatz, 1995. "Politico-Economic Interactions in Canada: an Empirical Assessment," Public Finance Review, , vol. 23(3), pages 305-335, July.
    6. Paul R. Blackley, 2003. "Price versus Income Effects as Sources of Growth in Government's Share of GDP," Public Finance Review, , vol. 31(3), pages 241-262, May.

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