Can Latin America Prosper by Reducing the Size of Government?

20 Pages Posted: 14 May 2013

See all articles by Radhames Lizardo

Radhames Lizardo

Independent

Andre V. Mollick

University of Texas - Pan American - College of Business Administration - Department of Economics & Finance

Date Written: June 14, 2009

Abstract

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

Lizardo, Radhames and Mollick, Andre V., Can Latin America Prosper by Reducing the Size of Government? (June 14, 2009). Cato Journal, Vol. 29, No. 2, 2009, Available at SSRN: https://ssrn.com/abstract=2264860

Radhames Lizardo

Independent ( email )

Andre V. Mollick (Contact Author)

University of Texas - Pan American - College of Business Administration - Department of Economics & Finance ( email )

1201 W. University Drive
Edinburg, TX 78539-2999
United States

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