The Composition of Public Expenditure and Economic Growth: Can Anything Be Learned from Swiss Data?

Abstract

Using time-series tests, the paper provides evidence that fiscal spending can influence long-run growth. Data are examined on six functional categories of public spending (education, health care, social welfare, transport, justice and national defense) over the period 1950 to 1994 for Switzerland. Permanent growth effects are found only for two expenditure categories: education (positive) and health care (negative). In addition, higher spending on transport and on defense appears to exert a temporary influence.

Keywords: fiscal policy, public expenditure, growth, Switzerland

JEL Classification: E62, F43, H30, H50, O52