Productive Government Expenditure and Economic Growth
53 Pages Posted: 2 Jun 2008
Date Written: May 2008
We provide a comprehensive survey of the recent literature on the link between productive government expenditure and economic growth. Starting with the seminal paper of Robert Barro (1990) we show that an understanding of the core results of the ensuing contributions can be gained from the study of their respective Euler equations. We argue that the existing literature incorporates many relevant aspects, however, policy recommendations tend to hinge on several knife-edge assumptions. Therefore, future research ought to focus more on idea-based endogenous growth models to check the robustness of policy recommendations. Moreover, the inclusion of hitherto unexplored types of government expenditure, e. g., on the "rule of law", would be desirable.
Keywords: economic growth, government expenditure, public goods, fiscal policy
JEL Classification: E62, H10, H21, H41, H54, O41
Suggested Citation: Suggested Citation