Institutions and the Impact of Government Spending on Growth
James L. Butkiewicz
University of Delaware - Economics
November 1, 2011
Journal of Applied Economics, Vol. XIV, No. 2 (November 2011), 319-341
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.
Keywords: economic growth, institutional quality, government expenditures
JEL Classification: O11, O23, O50, H5Accepted Paper Series
Date posted: May 22, 2012
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