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Determinants of the Composition of Government Expenditure by Functions

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  • Ismael Sanz
  • Francisco Javier Velázquez

Abstract

In this article we analyze the determinants of the functional distribution of government expenditure using for this purpose the models of the median voter's demand common in public choice literature. First of all, we review the economic literature on the factors affecting each component of government expenditure. Then, secondly, we develop a demand model of expenditure structure and we estimate the demand equations system for the sample of OECD countries in the period 1970-1997. The results reveal that, besides income and prices, institutional factors, population density and its age structure have significant effects on the composition of government expenditure.

Suggested Citation

  • Ismael Sanz & Francisco Javier Velázquez, 2002. "Determinants of the Composition of Government Expenditure by Functions," European Economy Group Working Papers 13, European Economy Group.
    • Handle: RePEc:eeg:euroeg:13
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