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Institutions and the Impact of Government Spending on Growth

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  • James L. Butkiewicz
  • Halit Yanikkaya

Abstract

This paper reports the results of a study of the impact of government expenditures on economic growth, emphasizing how government effectiveness influences the efficiency of government spending. The effects of sub-categories of government spending on growth are also examined. Total expenditures are estimated to have negative growth effects for some groupings of developed nations. Consumption expenditures are found to have a detrimental growth effect in developing nations with ineffective governments. Developing nations with ineffective governments benefit from capital expenditures. To stimulate growth, developing nations should limit their governments' consumption spending and invest in infrastructure.

Suggested Citation

  • James L. Butkiewicz & Halit Yanikkaya, 2011. "Institutions and the Impact of Government Spending on Growth," Journal of Applied Economics, Taylor & Francis Journals, vol. 14(2), pages 319-341, November.
    • Handle: RePEc:taf:recsxx:v:14:y:2011:i:2:p:319-341
    DOI: 10.1016/S1514-0326(11)60017-2
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    More about this item

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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