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Fiscal Policy and Economic Development

Author

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  • Alexandros Mourmouras
  • Peter Rangazas

    (Department of Economics, Indiana Unviersity-Purdue University Indianapolis)

Abstract

This paper offers possible explanations for three generally observed facts about fiscal policy and development: (F1) The relative size of government increases as an economy develops, (F2) The rise in government and taxation are associated with rising or constant economic growth rates, and (F3) Today’s developing countries have larger government sectors than did today’s developed countries at similar stages of development. The explanations for these facts are based on the structural transformation from traditional to modern production, rising public infrastructure investment, and less democratic governments in many of today’s developing economies.

Suggested Citation

  • Alexandros Mourmouras & Peter Rangazas, 2008. "Fiscal Policy and Economic Development," Working Papers wp200802, Indiana University-Purdue University Indianapolis, Department of Economics.
    • Handle: RePEc:iup:wpaper:wp200802
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    Cited by:

    1. Mr. Giovanni Melina & Mr. Rafael A Portillo, 2018. "Economic Fluctuations in Sub-Saharan Africa," IMF Working Papers 2018/040, International Monetary Fund.
    2. Susana Martins & Francisco Veiga, 2014. "Government size, composition of public expenditure, and economic development," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(4), pages 578-597, August.
    3. Peter Rangazas, 2013. "Introduction: The Dual Economy Approach to Economic Growth and Development," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 3(1), pages 1-7, June.

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    More about this item

    Keywords

    Structural Transformation; Wagner’s Law;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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