Can Latin America Prosper by Reducing the Size of Government?
20 Pages Posted: 14 May 2013
Date Written: June 14, 2009
This article examines the effect of government consumption on economic growth in 23 Latin American countries over the years 1974-2003. Employing the Armey Curve, we show that the typical Latin American government is spending beyond the optimal point. Using panel data and a fixed effects (FE) model, we find that increases in government consumption lead to unambiguous decreases in economic growth.
Keywords: Latin America and economic development, big government in Latin America, capitalism in South America
JEL Classification: H11, O11
Suggested Citation: Suggested Citation