State expenditure from a Marxist perspective

An overview of a Marxist approach to the theory of State expenditure is presented. This theory locates the problem of State expenditure in relation to the development of capitalism, without falling into reductionist or functionalist formulations. Military spending, education, and welfare and unemployment compensation are used as examples. The uneven development of capital and the growing problem of capitalist crisis offer an explanation of the recent growth of State expenditures in advanced capitalist countries. The neoclassical account of public spending overlooks links between State spending and capitalist production that the Marxist approach illuminates.     

Keynes,Employment Policy and the Question of Public Debt

This article provides a simple formalization of income–expenditure equilibrium in accordance with the Principle of Effective Demand, but augmented to explicitly incorporate public debt. This is utilized to explore the conditions required for simultaneous achievement of full-employment growth and a sustainable public debt trajectory—the latter understood as stabilization of the ratio of public debt to aggregate income, at some desired level. In the spirit of Keynes's economics, demand-led, full-employment growth, driven by government spending, is reconciled with public debt sustainability so understood. The policy implications, illustrative of Keynes's policy views, are then drawn out.     

MILITARY SPENDING,THREATS AND STOCHASTIC GROWTH

This paper analyses the impact of home military spending and foreign military threat on economic growth in a stochastic endogenous growth model involving the supply‐side and demand‐side effects produced by military spending. The paper states that an increase in home military spending affects economic growth through three channels, including the crowding‐out effect, the spin‐off effect, and the resource mobilization effect. The net effect which depends on these three channels is ambiguous. Hence, we demonstrate that there exists an optimal defence burden that maximizes the economic growth rate. Furthermore, the optimal defence burden depends on the degree of risk preference. Namely, the optimal defence burden of the risk‐loving agent is more than that of the risk‐neutral agent, and in turn is more than that of the risk‐averse agent. At the same time, we prove that the relationship between the volatility in military spending and economic growth also depends on the degree of risk preference. In addition, we show that greater volatility in foreign military spending leads to a decrease in home aggregate consumption, and hence speeds up economic growth in the home country.     

Economic growth,repression, and state expenditure in non-democratic regimes

This paper examines how economic growth affects government spending in non-democracies. A robust finding is that positive growth induces a significant increase in defence spending but a decrease in non-defence spending in dictatorships, with little effect in democracies. Government spending is slightly sensitive to negative growth across regimes. Higher growth rate in a country than its neighbours induces more spending than their average. Corruption causes a reduction in defence spending but an increase in non-defence spending. Primary education stimulates non-defence spending but reduces defence expenditure, secondary education causing the opposite effect. An under-developed country spends less than a developed country.     

Creating Legitimacy,Reciprocity, and Transfer Programs

Sustainable development prospects are not substantially visible in the comparative analysis of models of capitalism. The concept of sustainable development does not appear in the initial theoretical framework of the “variety of capitalism” approach or in the “diversity of capitalism” approach. This article aims to contribute to current thinking about the interaction between the diversity of capitalism and sustainable development, based on the concepts of institutional complementarity and hierarchy, and to question the dynamics of various forms of capitalism in this perspective. The example of economic policies aimed at tackling global warming shows how each form of capitalism adopts measures that are compatible with its own unique configuration of complementary institutions, helping to make it “greener.” However, this trend fits into a dynamic of “limited sustainability” that does not challenge the finance-dominated institutional hierarchy or the current growth regime. The non-viability of our production/consumption model on a global scale calls for a more radical change in capitalism, combined with a shift in the institutional hierarchy.     

Defence spending,economic growth and temporal causality: evidence from Taiwan and mainland China, 1952-1995

This paper uses a cointegration analysis and a vector autoregressive model (VAR) to examine the causal relationship between defence spending and economic growth for Taiwan and Mainland China over the period 1952–1995. It is found that these two variables are not cointegrated for both countries studied. The results of the Granger causality tests suggest bidirectional Granger causality (feedback) between defence spending and economic growth for Taiwan, unidirectional Granger causality running from economic growth to defence spending for Mainland China, and unidirectional Granger causality running from Taiwan's defence spending to Mainland China's defence spending for cross-country studied. These results further indicate that there exists no arms race between two countries from both sides of Taiwan strait. Furthermore, impulse responses and variance decompositions are incorporated into the analysis. The results from the impulse responses and variance decompositions tell a similar story.     

Terms of trade volatility,government spending cyclicality,and economic growth

This paper presents estimates of the effects that terms of trade volatility has on real gross domestic product (GDP) per capita growth. Based on 5‐year nonoverlapping panel data comprising 175 countries during 1980 to 2010, the paper finds that terms of trade volatility has significant negative effects on economic growth in countries with procyclical government spending. In countries where government spending is countercyclical, terms of trade volatility has no significant effect on growth. Conditional on the mediating role of government spending cyclicality, the GDP share of domestic credit to the private sector has no significant effect on the relationship between growth and terms of trade volatility.     

“Love of wealth” and economic growth

In a Ramsey–Cass–Koopmans growth framework it is shown that for an optimum a benevolent social planner cannot have an excessive “love of wealth”. With a “right” “love of wealth” an optimum exists and implies higher long‐run per‐capita capital, income, and consumption relative to the standard model. This has important implications for comparative development trajectories. The optimum implies dynamic efficiency with the possibility of getting arbitrarily close to the golden rule where long‐run per‐capita consumption is maximal. It is shown that the optimal path attains its steady state more slowly. Thus, the beneficial effects of love of wealth materialize later than in the standard model. Furthermore, the economy can be decentralized as a competitive private ownership economy. One can then identify “love of wealth” with the “spirit of capitalism.” The paper thus implies that one needs a “right” level of the “spirit of capitalism” to realize any beneficial effects for the long run.     

Fiscal policy, long‐run growth, and welfare in a stock‐flow model of public goods

Abstract.  We introduce public capital and public services as inputs in an endogenous growth model. We show that the growth rate depends on the apportionment of tax revenues between the accumulation of public capital and the provision of public services. When public spending is financed by proportional income taxes, the growth rate, the level of public spending as a proportion of GDP, the level of investment in public capital as a proportion of total public spending, and the level of private investment as a proportion of total private spending all are lower in the equilibrium outcome than in the optimal outcome. JEL classification: E62, O40     

Government Spending, Taxation, and Oil Revenues in Mexico

The paper analyzes the intertemporal relationship between oil duties, taxes, government spending, and GDP in Mexico during the 1981–98 period. The results from estimating a VAR model, impulse response functions, and variance decompositions on the quarterly series of taxes, government spending, oil duties, and GDP suggest that there seems to be a substitution effect between oil duties and tax revenues, and that tax revenues are not able to absorb temporary decreases in oil duties. Also, increases in tax revenue might lead to increasing government spending, but short–run increases in government spending are not likely to lead to political pressure to reduce the expected budget deficit via increased taxation and/or oil revenues. Lastly, GDP is not stimulated in the short–run by temporary increases in government spending and, thus, stabilization measures adopted in recent years to reduce the size of the government are not likely to significantly undermine GDP growth.     

Public finance,government spending and economic growth: the case of local governments in Brazil

The impact of local government spending on output growth is estimated using a panel of Brazilian municipalities during 1985–1994. Attention is focused on three expenditure categories, housing/urbanization, health/sanitation, and transport services, which are expected to be growth-enhancing, and their sources of finance (local taxes, intergovernmental transfers, and borrowing). The determinants of these spending categories are also examined. The size of the municipality, measured by the resident population, is shown to affect government spending nonlinearly. This is a contribution to the recent empirical literature on the linkages between decentralized government spending, public finances, and economic growth at the local, rather than national, level.     

Should Portuguese economy invest in defense spending? A revisit

In this paper, we investigate the causal relationship between defense spending and economic growth in Portugal during the period of 1980–2010. We apply the ARDL bounds testing approach in the presence of structural break. The ARDL–ECM estimation results disclose that the relations between defense spending, capital, labor and economic growth are country specific. The interesting finding of this study is that there is a U-shaped relationship that exists between defense spending and economic growth. In addition, the unidirectional causality from defense spending to economic growth exists in the case of Portugal. Therefore, defense spending can play an important role in economic development of Portugal.     

Government size,composition of public spending and economic growth in Brazil

The performance of the fiscal policy is largely affected by the relationship between government size, composition of public spending and economic growth. We use a theoretical framework to find optimal relations among these variables and confront them with a panel data for the Brazilian states. Private capital and government spending are substitute inputs in production as the Brazilian states require provision of public spending to fill gaps in the underdeveloped private sector. Public investment and current government expenditures are combined in fixed ratios in the overall government spending due to strong rigidity of the public budget. The optimal share of public investment is considerably lower than current expenditures, as occurs in developing countries characterized by low economic dynamism. Finally, the average tax burden from the data is below the estimated optimal level, meaning that there is space for increasing tax rate without harming economic growth for some Brazilian states.     

论新教伦理意识形态人力资本的经济功能——"韦伯命题"的启示

新制度经济学家诺斯认为意识形态是能够产生极大外部效果的人力资本.以"韦伯命题"的论证为基础,分析了新教伦理孕育下的意识形态人力资本的载体以及新教徒的资本主义精神体现,并围绕"韦伯命题"的答案--新教伦理是资本主义文明在西方得以发展的精神动力,重点探讨了新教伦理的意识形态人力资本对资本主义企业的资本积累、劳动力储备、劳动力自我激励和自我约束、企业管理费用的节约以及企业家精神的培育等方面的重大作用,以此启示我国企业在制度构建过程中,要加强对企业文化核心层--企业精神和价值观等的建设,充分发挥意识形态人力资本这一非正式制度的作用.     

国防支出与经济增长均衡关系的理论和实证研究——基于门槛回归模型的检验分析

文章首先将国防支出纳入Solow增长模型进行理论分析,假定国防支出通过影响技术进步对经济增长产生影响。与现有实证分析不同,文章基于1952-2008年中国的有关时间序列数据,尝试运用非线性门槛回归模型来分析国防支出与经济增长之间的数量关系。研究发现:国防支出与经济增长之间存在门槛效应,国防支出占GDP的比例低于3.434%时,国防支出占GDP的比例的增加不利于经济增长,且这种负面作用较为显著;当该比例高于3.434%时,该比例的增加将显著促进经济增长。当然,该比例并非越低越好,也并非越高越好,其局部最优规模由次级门槛值决定。     

Guns,highways and economic growth in the United States

Given its significant policy implications, the nexus between public expenditures and economic growth has been the subject of an extensive and often emotive theoretical and empirical debate. The nexus between two types of public expenditures and economic growth is examined in this paper using both linear and nonlinear causality tests. Both spending on highways and on defence are regarded, albeit with not the same intensity of conviction, as useful counter-cyclical policy instruments and as stimuli to economic growth. Findings reported herein from both linear and non-linear causality tests offer evidence in support for the growth enhancing properties of the former type of public spending but not so in the case of military expenditure.     

Dynamic relationships between oil revenues,government spending and economic growth in an oil-dependent economy

The aim of this paper is to empirically examine the dynamic relationships between oil revenues, government spending and economic growth in the Kingdom of Bahrain. Oil revenues are the main source of financing government expenditures and imports of good and services. Increasing oil prices in the recent years have boosted public expenditures on social and economic infrastructure. In this paper, we investigate whether the huge government spending has enhanced the pace of economic growth or not. To this end, we use a multivariate cointegration analysis and error-correction model and data for 1960–2010. Overall results suggest that oil revenues remain the principal source for growth and the main channel which finance the government spending.     

Functional components of public expenditure,fiscal consolidations,and economic activity

This paper analyses how the functional components of public expenditure and spending‐driven consolidations affect the economic growth, unemployment, and income inequality. A dynamic panel data least squares dummy variable estimator estimator is employed over a sample of 15 European Union countries during the period 1990–2012. The empirical results show that real GDP growth decreases when fiscal austerity measures are implemented, especially if they are spending‐driven. Cuts in public expenditure undermine economic growth, namely if they slash spending on public order, recreation, and education. Spending cuts on education, in particular, affect the investment in human capital, harming not only growth but also economic, social, and human development. The unemployment rate also proved to be significantly boosted when austerity measures restrict spending on education, whereas income inequality rises when social protection expenditures are cut.     

Public capital, endogenous growth, and endogenous fluctuations

Cazzavillan [Cazzavillan, G., 1996. Public spending, endogenous growth, and endogenous fluctuations. Journal of Economic Theory 71, 394–415] studies a discrete-time, one-sector endogenous growth model with a flow of publicly enjoyable goods and productive services financed through income taxation. He demonstrates how equilibrium paths are indeterminate, for a large range of the consumption externality of public spending. This study extends [Cazzavillan, 1996] by considering an otherwise identical production function, except with public capital stock as an input. The results support the robustness of multiple growth paths even in a one-sector growth model with public capital stock, and modify the set of the consumption externality of public spending, in determining growth dynamics in a similar model with non-accumulated public spending.     

Corruption and growth: The role of governance,public spending,and economic development

This paper analyses how the quality of governance, the size of public spending, and economic development affect the relationship between bureaucratic corruption and economic growth. The analysis shows that the interaction between corruption and governance shapes the efficiency of public spending, which in turn, determines the growth effects of corruption. Specifically, corruption improves economic efficiency only when the actual government size is above the optimal level. It implies that a growth-maximising level of corruption is possible. This paper also finds that the incidence of corruption declines with economic development. This is because with economic development the wage rate rises and makes private rent seeking costs higher, thereby, discouraging corruption. The main policy implication is that targeting tax evaders instead of bureaucrats is more effective in terms of both reducing corruption and improving the growth potential of an economy.