GOVERNMENT SIZE AND GROWTH: A REJOINDER

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.     

政府债务对经济增长的影响及作用渠道

基于1960～2010年113个国家的面板数据集,运用系统广义矩动态面板方法和稳健性分析,比较发达国家和发展中国家政府债务经济增长效应的差异,并尝试分析政府债务影响经济增长的渠道。研究结果显示,政府债务对经济增长有非线性影响;发达国家政府债务对经济增长、投资以及全要素生产率均无显著影响;发展中国家对政府债务的直接承受力更弱,但在一个宽松的临界点内,政府债务的增加可以提高投资率。     

GOVERNMENT SIZE AND GROWTH: A SURVEY AND INTERPRETATION OF THE EVIDENCE – A COMMENT

In contrast to the commonly held view, Bergh and Henrekson (2011) conclude that a consensus has almost been reached on the thesis that government size is negatively correlated with economic growth in developed countries. They underpin this by claiming that the only study in the survey to deviate from this consensus view, i.e. Colombier (2009), was rebutted by Bergh and Öhrn (2011). This comment shows that the claim by Bergh and Henrekson (2011) cannot be upheld because the analysis by Bergh and Öhrn (2011) is based on a flawed dataset. The re‐estimation of Colombier's (2009) regressions with time‐fixed effect does not reject his main findings. Moreover, it is demonstrated that recent empirical evidence on the growth impact of government size in rich countries is not as unanimous as the survey by Bergh and Henrekson (2011) suggests. Thus, the claim that a consensus view has been reached is premature.     

政府规模、政府支出增长与经济增长关系的非线性研究

本文运用面板平滑转换回归模型(PSTR),在非线性的框架下对政府规模与经济增长关系的渐进演变展开深入研究,并对可能引发两者关系结构性转变的警戒政府规模进行有效估算。研究结果表明,政府规模与经济增长之间存在着非线性关系,即随着政府规模的逐步增大,由于税负增加等因素的影响,使得政府支出增加所产生的负效应影响逐步凸显,而政府规模进一步扩大并超过警戒水平时,过度拥挤的政府支出对经济增长将由促进作用转变为阻碍作用。研究还发现,尽管我国政府支出增长与经济增长的关系参数值有所下降,但由于基础设施落后,公共物品与公共服务供给仍然相对不足,政府支出的增加仍有助于促进经济的进一步发展。     

DOES GOVERNMENT SPENDING AFFECT INCOME INEQUALITY? A META-REGRESSION ANALYSIS

In this paper findings of a meta-regression analysis are presented exploring the effects of government spending on income inequality, with a particular focus on low- and middle-income countries. We identify a total of 84 separate studies containing over 900 estimates of the effect of one or more measures of spending on one or more measures of income inequality. The results show some evidence of a moderate negative relationship between government spending and income inequality, which is strongest for social welfare and other social spending, and when using the Gini coefficient or the top income share as the measure of inequality. However, both the size and direction of the estimated relationship between government spending and income inequality is affected by a range of other factors, including the control variables and estimation method used. We also find evidence of publication bias, in that negative estimates of the relationship appear to be under-reported in the literature.     

When is there a Kuznets curve? Some evidence from the ex-socialist countries

This paper investigates when there is a Kuznets curve, that is, under which conditions income inequality eventually declines with economic growth. The analysis was performed on a sample of 26 ex-socialist countries from the former Eastern Bloc, during the post-socialist years. These countries had very similar characteristics when socialism collapsed, but very different experiences with transition afterwards, which makes them a suitable group for analysing the relationship between GDP and inequality. We focus on four factors that may shape this relationship – labour market institutions, the market power of companies, social benefits and taxes. Our findings suggest that the Kuznets curve is present only when control of companies’ market power is effective and taxes are high.     

PRODUCTIVE GOVERNMENT EXPENDITURE AND ECONOMIC GROWTH

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.     

Environmental taxes,reforms and economic growth: an empirical analysis of panel data

This paper explores the relationship between environmentally related taxes and the economic growth rate. The analysis also investigates whether this relationship differs between countries that have implemented environmental tax reforms (ETRs) and those that have not. Using panel data from 31 OECD countries over the period 1994–2013, the paper finds that when we allow environmentally related tax revenues to interact with an initial level of real GDP per capita, the overall revenues of these taxes are negatively associated with the economic growth rate in the short and long term. Furthermore, we show that the higher the initial level of GDP per capita, the more environmentally related tax revenues can promote the economic growth rate. The analysis also reveals that the relationship between environmentally related tax revenues and economic growth varies between countries that have a mechanism to redistribute environmentally related tax revenues and those that do not.     

Tax enforcement,technology, and the informal sector

Theoretical models of the informal sector mostly assume—or end up with—a positive correlation between a measure of taxes and the size of the informal sector. However, some recent empirical studies associate higher taxes with a smaller informal sector size. In this paper, we build a theoretical framework—an extension to a two-sector growth model—which allows us to unravel the negative correlation between informal sector size and taxes. We find that (a) a higher degree of tax enforcement, (b) a higher productivity of formal sector households, and (c) a lower physical capital depreciation rate make for a negative relation between these variables. Our results suggest that enforcement and technological factors are likely candidates to account for this relationship.     

Factor taxation and labor supply in a dynamic one-sector growth model

This paper studies a class of AK-type growth models with factor income taxes, public capital stock and labor–leisure trade offs. While a higher capital tax rate reduces economic growth in the short run, the long-term growth effect is ambiguous and remains ambiguous even if the level of tax rate is larger than the degree of government externality. A higher labor income tax rate has ambiguous growth effects both in the short and long runs. However, if the intertemporal elasticity of substitution for labor supply is sufficiently small, a higher labor tax rate always lowers economic growth in the long run, despite the existence of productive government taxation.     

Business cycles and redistribution: The role of government quality

We study how government quality mediates the relationship between business cycles and redistribution. Our key hypothesis is that the potential of income redistribution to reduce rising inequality levels after an economic crisis depends on government quality. The empirical evidence based on a panel of 46 countries over the period 1996–2016 lends strong support to this hypothesis. We find that macroeconomic recessions promote redistribution of income in high government quality contexts, but they lead to wider economic inequalities in countries with poor quality of government.     

我国财政与经济增长关系:基于Bootstrap仿真方法的实证检验

不同经济体的财政与经济增长作用关系存在差异性,研究文献对二者理论关系的认识也并不统一。本文采用小样本可靠的Bootstrap仿真方法,利用1952~2003年为样本期的时序数据,对我国政府支出与经济增长进行了Granger因果关系的实证检验。比较研究显示,基于渐近理论的传统检验结果认为,二者不存在统计上的协整关系。利用Bootstrap仿真方法却得到不同的结论,即政府支出与经济增长具有双向的Granger因果关系,意味着我国财政和经济增长存在相互促进作用。本文结论与大多数研究文献观点存在显著区别。     

Federalism,taxation, and economic growth

We present a model of endogenous growth where government provides a productive public good financed by income and capital taxes. In equilibrium, a decentralized government chooses tax policy to maximize economic growth, while a centralized government does not do so. Furthermore, these conclusions hold regardless of whether governments are beholden to a median voter or are rent-maximizing Leviathans. However, a decentralized government will under-provide public goods which benefit citizens directly, while a central government beholden to the median voter will optimally invest in such public goods.     

Growth,deficits and uncertainty: Theoretical aspects and empirical evidence from a panel of 27 countries

We examine the relationship between fiscal deficits and per-capita income growth in a panel of 27 European countries, allowing for perceived risks, in terms of fiscal sustainability, associated with additional government spending. Such risks are proxied by the conditional variability of manufacturing production and stock market returns and by the unconditional variability of two survey-based economic-sentiment indicators. To help clarifying how fiscal variables impact on growth and to provide a point of reference for the interpretation of the empirical results a structural growth model is first identified. We find evidence of an asymmetric relationship, in that fiscal deficits give rise to adverse growth effects if they coincide with high uncertainty regarding the prospects of the economy and no significant negative growth effects in the low-uncertainty case.     

Long-run growth and welfare effects of public policies with distortionary taxation

In a one-sector growth model with infrastructure investment, we study the impact of fiscal policies on growth. The government collects taxes on labor income and profits. The government uses these revenues to purchase infrastructure investment, provide utility enhancing government services, and to provide transfer payments to the households. We show that the balanced growth rate is an increasing function of the percent of government revenues that goes to infrastructure. We find that the growth maximizing mix of taxes depends on the elasticity of substitution between inputs. In particular, with distortionary taxes, the growth maximizing tax rate on capital is higher the lower the elasticity of substitution between private physical capital and public capital. In addition, the growth maximizing size of the government is higher when the elasticity of substitution between public and private inputs is low. We also investigate welfare effects of other public expenditures as well. Depending on the elasticity of substitution in production, the welfare implications of different public policies can be substantial.     

Economic sentiment and business cycles: A spillover methodology approach

This paper is one of the latest attempts to observe and explain the relationship between the Economic Sentiment Indicator (ESI) and GDP growth. This new approach uses the Diebold and Yilmaz (2012, 2009) spillover methodology by combining the feedback relationship and the time-varying (dynamic) aspect of that same relationship. The empirical analysis is based on quarterly data over different periods in the European Union (EU) (as a whole) and in ten Central and Eastern European (CEE) countries. The main results indicate that the spillovers of shocks between ESI and GDP growth are time-varying for all observed countries, with increasing values of total spillovers in the last recession and afterwards. The direction and strength of spillover effects between economic sentiment and GDP growth are different for the analysed CEE countries. The results are robust with respect to changing the rolling window length, additional Granger causality testing and rolling correlation coefficients.     

是市场的功能还是政府的作用——从传统、转型期经济向现代市场经济过渡

我们把发展中国家和经济转型期国家经过市场参数变换的区域称之为复通经济区域。本文从理论上揭示出在这些区域向现代市场经济过渡的时期必然存在着经济的零增长阶段,在此阶段如果政府无作用或作用不当,通货膨胀、贫富差距拉大和社会动荡等现象是不可避免的,这种现象从拉美等经济转型期国家的经验数据得到了验证。本文在此基础上以中国经济转型期的经验数据和实践基础论证了政府作用于市场经济的基本原理和方法,进而通过中国经济平稳增长过渡的"路径依赖"说明了中国经济改革和发展的科学性和正确性。     

债务率、偿债压力与地方债务的经济增长效应

研究目标：中国地方政府债务对于经济增长的门限效应。研究方法：基于债务率,即债务存量与地方政府综合财力的比值的视角,利用中国30个省份2010~2014年年底的地方债务余额数据,对地方债务的经济增长效应进行了实证研究。研究发现：中国地方债务存在明显的经济增长门限效应：当债务率高于112%左右之后,原本正向显著的经济增长促进作用基本趋近于无,而其作用渠道可以明确为如下传导机制,债务率高企带来地方政府偿债压力从而影响经济发展导向的财政支出。研究创新：引入债务率指标并基于偿债压力视角分析了地方债务对于经济增长的作用机制。研究价值：对于我国地方政府债务的管控治理和风险防范,具有重要的参考价值。     

Government Consumption and Industrial Productivity: Scale and Compositional Effects

Within a production function framework in which government spending produces public goods which enter firms production functions, empirical tests using time series data spanning eleven countries and thirty industries find both the scale and the composition of government consumption spending to affect the level and the rate of growth of total factor productivity at the industry level.Jel Classification: H50, D24     

Dynamics of group grievances from a global cohesion perspective

Grievances are vulnerable to state development and harmony; however, some factors provoke the masses and groups to vulnerability and state fragility (SF) by disturbing social cohesion. Under the grievance assumptions on the political process, this study has been designed to gauge the nexus of group grievances (GG), an essential parameter of social cohesion, institutional governance (IG), government legitimacy (GL), economic growth (EcG), and population growth (POPG) from the global perspective from 2008 to 2022 in a global panel of 158 countries considering the critical aspect of SF. The statistics reveal that PS is essential in controlling and managing the GG in the state. PS is the most significant factor in harmonizing the state's ethnic minorities, focus, and religious groups with stable policies and their grievances issues. It also states that apart from PS, another aspect of IG, Control of Corruption (CoC), helps mitigate malpractices and provides a transparent environment supporting grievances. It further demonstrates that EcG provokes grievances instead of lessening them among the key groups in the state, especially in the processing of industrialization. Because of the government's partiality to provide benefits to specific groups or sectors, that partiality and injustice hype the grievances among the public. Moreover, POPG is also a significant factor in increasing GG, along with government illegitimacy and untrust. The study concludes that to make the country agile and prosperous, the government should balance developing industrialization without compromising agricultural and domestic industries. It helps states gain public trust in the IG framework and GL. The government should harmonize its policies by tackling all minorities, ethnic, and religious groups coherently to maintain social cohesion in the country. Finally, One of the significant factors in natural resources and the scarcity of global resources is population. It stated that prudent population control measures better assist in resource scarcity and conflict management, such as in EU countries compared to Asia and Africa. Recent grievance movements in Brazil, China, India, Nigeria, Pakistan, and the US, are the practical application of this study because these countries fall in the list of the top 10 most populous countries. So, population control policies should be effectively implemented to support economic and social parity and mitigate GG.