Abstract

http://ssrn.com/abstract=998262
 
 

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Citations (1)



 


 



Growth Effects of Government Expenditure and Taxation in Rich Countries


Stefan Foelster


Confederation of Swedish Enterprise; Swedish Research Institute of Trade (HUI)

Magnus Henrekson


Research Institute of Industrial Economics (IFN)


European Economic Review, Vol. 45, No. 8, 2001

Abstract:     
A number of cross-country comparisons do not find a robust negative relationship between government size and economic growth. In part this may reflect the prediction in economic theory that a negative relationship should exist primarily for rich countries with large public sectors. In this paper an econometric panel study is conducted on a sample of rich countries covering the 1970-95 period. Extended extreme bounds analyses are reported based on a regression model that tackles a number of econometric issues. Our general finding is that the more econometric problems are addressed, the more robust the relationship between government size and economic growth appears. Our most complete specifications are robust even according to the stringent extreme bounds criterion.

Number of Pages in PDF File: 19

Keywords: Economic growth, Extreme bounds analysis, Fiscal Policy, Government expenditure, Public sector, Taxation, Cross-country regressions, Panel regressions, Robustness test

JEL Classification: E62, H20, H50, O23, O40

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Date posted: July 5, 2007  

Suggested Citation

Foelster, Stefan and Henrekson, Magnus, Growth Effects of Government Expenditure and Taxation in Rich Countries. European Economic Review, Vol. 45, No. 8, 2001. Available at SSRN: http://ssrn.com/abstract=998262

Contact Information

Stefan Foelster
Confederation of Swedish Enterprise ( email )
Storgatan 19
SE-114 82 Stockholm
Sweden
Swedish Research Institute of Trade (HUI) ( email )
S-103 29 Stockholm
Sweden
+46 8 762 72 88 (Phone)
+46 8 679 76 06 (Fax)
Magnus Henrekson (Contact Author)
Research Institute of Industrial Economics (IFN) ( email )
P.O. Box 55665
Grevgatan 34
Stockholm, SE-10215
Sweden
+46-8-6654502 (Phone)
+46-8-6654599 (Fax)
HOME PAGE: http://www.ifn.se/mh
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