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Economic growth and the size & structure of government: Implications for New Zealand

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  • Arthur Grimes

Abstract

The work of Gwartney, Holcombe and Lawson (GHL, 1998) has been cited in New Zealand to demonstrate that a larger government share of GDP is detrimental for economic growth. Their work is reassessed here. We find a number of omissions in their analysis that lead to a considerable over-statement of the effect of government size on growth. More important for growth, according to other recent work, are the structures of government revenues and expenditures. The size and structure of New Zealand government flows are examined using recent IMF data. This analysis indicates that New Zealand has a relatively small government sector. However, the structures of both government revenues and expenditures warrant attention.

Suggested Citation

  • Arthur Grimes, 2003. "Economic growth and the size & structure of government: Implications for New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 37(1), pages 151-174.
    • Handle: RePEc:taf:nzecpp:v:37:y:2003:i:1:p:151-174
    DOI: 10.1080/00779950309544382
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    References listed on IDEAS

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    1. William Easterly, 2002. "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550423, December.
    2. Andrea Bassanini & Stefano Scarpetta & Philip Hemmings, 2001. "Economic Growth: The Role of Policies and Institutions: Panel Data. Evidence from OECD Countries," OECD Economics Department Working Papers 283, OECD Publishing.
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    Cited by:

    1. Herath, Shanaka, 2009. "The Size of the Government and Economic Growth. An Empirical Study of Sri Lanka," SRE-Discussion Papers 2009/08, WU Vienna University of Economics and Business.
    2. Diana Cook & Carsten Schousboe & David Law, 2011. "Government and economic growth: Does size matter?," Treasury Papers Series tp11/01, New Zealand Treasury.
    3. Sefa Awaworyi Churchill & Mehmet Ugur & Siew Ling Yew, 2017. "Does Government Size Affect Per-Capita Income Growth? A Hierarchical Meta-Regression Analysis," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 142-171, March.
    4. Shanaka Herath, 2012. "Size Of Government And Economic Growth: A Nonlinear Analysis," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 57(194), pages 7-30, July - Se.
    5. anwar, saba & munir, kashif, 2013. "Size of the Government, Quality of Institutions and Growth in SAARC Countries," MPRA Paper 49524, University Library of Munich, Germany.

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