Productive Government Expenditure and Economic Growth

42 Pages Posted: 13 Oct 2009

See all articles by Andreas Irmen

Andreas Irmen

University of Luxembourg - Ceter for Research in Economic Analysis (CREA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research), Munich

Johanna Kuehnel

Heidelberg University - Alfred Weber Institute for Economics

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Abstract

We provide a comprehensive survey of the recent literature on the link between productive government expenditure and economic growth. We show that an understanding of the core results and 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.

Suggested Citation

Irmen, Andreas and Kuehnel, Johanna, Productive Government Expenditure and Economic Growth. Journal of Economic Surveys, Vol. 23, Issue 4, pp. 692-733, September 2009. Available at SSRN: https://ssrn.com/abstract=1486858 or http://dx.doi.org/10.1111/j.1467-6419.2009.00576.x

Andreas Irmen (Contact Author)

University of Luxembourg - Ceter for Research in Economic Analysis (CREA) ( email )

162a, avenue de la Faïencerie
Luxembourg, L – 1511
Luxembourg

HOME PAGE: http://wwwen.uni.lu/recherche/fdef/crea/people/andreas_irmen

CESifo (Center for Economic Studies and Ifo Institute for Economic Research), Munich

Poschinger Str. 5
Munich, DE-81679
Germany

Johanna Kuehnel

Heidelberg University - Alfred Weber Institute for Economics ( email )

Bergheimer Str. 58
Heidelberg, D-69115
Germany

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