Government Size and Growth: A Rejoinder
4 Pages Posted: 3 Mar 2016
Date Written: April 2016
In our 2011 survey of the literature in the Journal of Economic Surveys on the effect of government size on economic growth in wealthy countries we find a relatively consistent pattern: An increase in government size by 10 percentage points is associated with a 0.5–1 percentage point lower annual growth rate. This conclusion is questioned by Colombier. In this rejoinder we present a rebuttal of Colombier's argument based on a detailed scrutiny of his own statistical evidence and regression results. Furthermore, we note that several new papers that have appeared since our original paper was published give support to our main conclusion.
Keywords: Cross‐country regressions, Economic freedom, Economic growth, Globalization, Government expenditure, Government size, Taxation
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