Government Size, Composition, Volatility and Economic Growth

45 Pages Posted: 27 Jan 2008

See all articles by Antonio Afonso

Antonio Afonso

University of Lisbon - ISEG (School of Economics and Management); UECE (Research Unit on Complexity and Economics)

Davide Furceri

University of Palermo; Organization for Economic Co-Operation and Development (OECD)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2008

Abstract

This paper analyses the effects in terms of size and volatility of government revenue and spending on growth in OECD and EU countries. The results of the paper suggest that both variables are detrimental to growth. In particular, looking more closely at the effect of each component of government revenue and spending, the results point out that i) indirect taxes (size and volatility); ii) social contributions (size and volatility); iii) government consumption (size and volatility); iv) subsidies (size); and v) government investment (volatility) have a sizeable, negative and statistically significant effect on growth.

Keywords: fiscal policy, government size, fiscal volatility, economic growth

JEL Classification: E62, H50, O40

Suggested Citation

Afonso, Antonio and Furceri, Davide, Government Size, Composition, Volatility and Economic Growth (January 2008). ECB Working Paper No. 849. Available at SSRN: https://ssrn.com/abstract=1077767

Antonio Afonso (Contact Author)

University of Lisbon - ISEG (School of Economics and Management) ( email )

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal
+351 21 392 5985 (Phone)
+351 21 396 6407 (Fax)

HOME PAGE: http://https://www.iseg.ulisboa.pt/aquila/homepage/aafonso

UECE (Research Unit on Complexity and Economics)

Rua Miguel Lupi 20
Lisbon, 1249-078
Portugal
+351-213 925 912 (Phone)
+351-213 971 196 (Fax)

HOME PAGE: http://https://uece.rc.iseg.ulisboa.pt/

Davide Furceri

University of Palermo ( email )

Viale delle Scienza
Palermo, 90128
Italy

Organization for Economic Co-Operation and Development (OECD) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

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