Does too much government spending depress the economic development of transition economies? Evidences from dynamic panel threshold analysis

This paper investigates the relationship between government size and economic growth and determines the optimal level of government spending to maximize economic growth. The paper applies a dynamic panel data analysis based upon a threshold model to test the threshold effect of government spending in 26 transition economies over the period spanning 1993–2016. According to the analysis results, government expenditures have a threshold effect on economic growth, and there is a non-linear relationship depicted as an Armey curve in these transition economies. The findings indicate that a government size above the threshold government spending level adversely affects economic growth, while a government size below the threshold level has a positive effect. Furthermore, there is a statistically significant relationship between the two variables above and below that optimal level, even if we divide the sample into developed and developing countries. Our findings suggest that governments in transition economies should consider optimal government size at around the estimated threshold level to support sustainable economic growth.     

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.     

How does public spending affect technical efficiency? Some evidence from 15 European countries

The relationship between government size and economic growth has been widely debated. Revisiting the subject from a distinct angle with respect to the mainstream approach, we provide an empirical analysis of the impact of government size on technical efficiency. The aim of this paper is to estimate the impact of public sector's size and of public expenditure components on 15 European countries’ technical efficiency from 1996 to 2014 by using a True Random Effect model. Using the total public expenditure as a proxy for the government size we estimate simultaneously national optimal production function and technical efficiency by controlling for income distribution and institutional quality. Our main findings show that the effect of public sector's size on efficiency is positive while the type of public expenditures may have both positive and negative impact. In more details, results suggest that education and health expenditures have a positive effect on technical efficiency, while others have a negative impact.     

Estimating the impact of government consumption on growth: Growth accounting and endogenous growth models

Panel data is analyzed on government consumption and GDP growth in 116 countries, 1950–90. The purported positive impact of government growth on GDP growth is due to simultaneity bias. The negative cross-national correlation between government size and economic growth reflects in part an equilibrium relationship. Growth is a non-monotonic function of government size (measured at current domestic prices). Growth rates are increasing in government consumption expenditures up to a level around 12 percent of GDP.     

Social security, public education and the growth-inequality relationship

We study how the relationship between economic growth and inequality depends upon the levels of funding of two of the largest government programs, public education and social security. We do this in the context of an overlapping generations economy with heterogeneous agents where the government collects a tax on labor income to finance these programs. We show that in our model an increase in government spending on social security reduces income inequality and can have a non-monotonic effect on growth. When the initial level of social security funding is low, as is the case in most poor economies, then its increase will enhance growth. When its funding level is high as is typical for developed countries, we show that its further increase can slow down growth while reducing income inequality. These results obtain regardless of whether the increase in social security funding is financed by a tax increase or by cutting the public education budget. We also find that the effects of increasing the level of public education expenditures or the overall size of the government budget (holding the budget composition fixed) are characterized by similar non-monotonic growth-inequality relationships.     

公共支出结构与经济增长关系的实证分析

采用1980～2004年的统计数据,实证分析了公共支出结构与经济增长之间的关系.研究发现:社会性支出对经济增长有一定的促进作用,但统计上并不显著;经济性支出对经济增长具有不显著负相关性;维持性支出对经济增长存在显著负相关性.据此,提出了增加社会性支出、缩减经济性支出与维持性支出的公共支出结构调整的政策建议.     

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.     

DEFENCE AND NON‐DEFENCE SPENDING IN THE USA: STIMULI TO ECONOMIC GROWTH? COMPARATIVE FINDINGS FROM A SEMIPARAMETRIC APPROACH

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. In this paper, a semiparametric model is used to explore the link between GDP and defence and non‐defence government spending in the USA over the period 1929–2009. Evidence reported herein indicates that the latter represents a greater stimulus vis‐à‐vis the former.     

Government size and economic growth in an endogenous growth model with rent‐seeking

We explore the relationship between government size and economic growth in an endogenous growth model with human capital and an unproductive capital which facilitates rent‐seeking. With exogenous as well as endogenous time discounting, we find a non‐monotonic relationship between the size of government and economic growth. We find that with very high (low) discounting, there is a unique low (high) growth equilibrium, regardless of the size of government. For the intermediate range of discounting, there are multiple equilibria and the growth outcome depends on the size of government. With endogenous time discounting, the growth outcome is path dependent and depends on the level of inherited human capital. However, there is only one stable growth regime and the economy endogenously switches to it. When the institutional constraints on rent‐seeking are not extremely high, the stable regime is the one in which there is a high‐growth equilibrium for a smaller size of the government and for larger size, both the high‐growth and the low‐growth equilibrium coexist. When the institutional constraints on rent‐seeking are extremely high, there exists only a unique high‐growth equilibrium irrespective of the size of government. Furthermore, economies with bigger size of the government and/or with poor quality institutions will take longer to endogenously switch to this stable growth regime.     

政府公共资本投资的长期经济增长效应

本文首先建立一个包含政府公共资本投资的两部门内生增长模型,并把公共资本投资分为政府物质资本投资和人力资本投资,从而对公共资本投资的长期经济增长效应进行理论分析。结论是,两种形式的公共资本投资对长期经济增长都可能具有正效应也可能具有负效应,取决于民间经济主体消费跨时替代弹性大小。其次,我们利用向量自回归分析框架,对我国1978—2004年间公共资本投资对长期经济增长的影响作实证分析。结论是,我国两种形式的公共资本投资与经济增长之间存在着长期均衡关系,其中政府公共物质资本投资对长期经济增长的正影响更为显著,而政府公共人力资本投资对长期经济增长的正影响较小,且在短期内不利于经济增长。这一结论对我国今后科学制定财政政策和选择公共投资领域都具有重要意义。     

THE DISTRIBUTIONAL CONSEQUENCES OF GOVERNMENT SPENDING AND TAXATION IN THE U.S., 1989 AND 2000

We assess the effects of government expenditures and taxation on household economic well-being in the United States in 1989 and 2000. Net government expenditure is estimated as the difference between government expenditures incurred on behalf of the household sector—transfers and public consumption—and the taxes paid by that sector. We incorporate the estimates of net government expenditures into a wealth-adjusted measure of income. We find that overall inequality in our income measure is considerably reduced by net government expenditures. Results from decomposition analysis show that the inequality-reducing effect of net government expenditures owed more to expenditures than to taxes.     

地方政府支出有偏性、企业融资约束与经济结构失衡

文章基于地方政府视角下困扰当前中国经济增长的结构性现实问题，根据1993—2012年的中国省际年度数据，借鉴 Bernanke 等(1999)和 Fernández-Villaverde(2010)的分析思路，运用动态随机一般均衡模型，实证研究了经济结构失衡①与由地方政府支出有偏性引起的政府投资增加之间的内在逻辑关系。研究发现：(1)伴随着经济增长，东、中、西部的社会投资占 GDP 的比重不断地提高，而居民消费和劳动收入占 GDP 的比重则呈下降趋势，这些经济结构失衡的表现与由地方政府支出有偏性引起的政府投资增加是共存的。(2)通过对大企业模型、中小企业模型和粘性价格模型进行的模拟比较分析发现，地方政府发展经济的目的促使其支出行为表现为有偏性，引发了政府投资较大幅度的增加；基于融资约束，中小企业的投资增幅不大，而大企业投资高涨，引致了地方经济结构失衡的加剧，而在这传导机制中政府投资的正外部性、企业融资约束和金融摩擦担当重要角色。     

An empirical examination of government expenditures and the ex-ante crowding-out effect for the British economy

The conventional macroeconomic view that consumers make their consumption decisions without regard for goods provided by the government has been examined in the literature. Moreover, the line of research that questions this conventional view argues that this separation does not have a firm theoretical backing. If consumers take government expenditures into account when maximizing their utility functions then the effects of fiscal policy actions will tend to appear weaker than those suggested by most conventional analyses. The examination of this issue should therefore have far-reaching political as well as economic implications within the context of traditional fiscal policies.

This paper will empirically examine the ex antecrowding-out effect of government expenditures upon private consumption expenditures for the British economy. An aggregate consumption function is derived and estimated in the context of a simultaneous equations model based on intertemporal consumption theory. The empirical results should shed some light on the real effects of fiscal policy on the British economy.     

Military Spending, Government Disarray, and Economic Growth: A Cross-Country Empirical Analysis

Recent years have seen a spate of empirical studies that have used cross-country regressions to examine a variety of possible determinants of long-term economic growth. The present study considers an additional, largely overlooked, explanatory variable: military spending. Consistent with Thompson’s (1974) hypothesis that enhanced national defense fosters economic growth by increasing the security of property rights, the military expenditures share of GDP is found to have a statistically significant positive impact on the growth rate of per capita GDP. This result is obtained for two alternative model specifications, a Barro-regression and a LISREL variant of that regression. The LISREL variant is motivated by Sala-i-Martin’s (1994) claim that the impact of government economic policies jointly, rather than extant government policies individually and separately, is "the phenomenon that really matters" for long-term economic growth.     

影响我国地方政府财政支出效率的因素研究*——基于财政、晋升和发展压力的视角#br#

提高地方政府财政支出效率是实现财政可持续发展的重要条件。本文使用2004—2016年我国30个省份的数据,基于DEA模型和Malmquist指数测算了我国地方政府的财政支出效率,并分析了财政压力、晋升压力和发展压力对地方政府财政支出效率的影响。结果表明：（1）各地区财政支出技术效率变动指数均值和规模效率均值变化差异不大;（2）财政压力越大,地方政府财政支出效率越低;（3）经济增长率越高,地方政府财政支出效率越低;（4）地方政府超额完成中央的经济发展目标有利于改善当地财政支出效率。     

国防开支与经济增长关系分析——基于面板数据的费德尔-拉姆模型

本文在对国内外国防支出与经济增长的研究文献、方法和结论总结分析的基础上,运用基于面板数据的费德尔一拉姆理论模型,对国防开支与经济增长之间的关系进行了定量分析,得出由于经济增长方式不同,在发展中国家,国防开支对国民经济增长具有显著的正向促进作用,而发达国家,国防开支和国民经济增长之间并没有显著的关系结论。     

FUNCTIONAL ESTIMATES OF JAPANESE GOVERNMENT DOMESTIC EXPENDITURES, FISCAL 1952–1963

The purpose of the paper is to describe current and constant price estimates of Japanese central and local government postwar domestic expenditures by economic type and function recently completed by Miss Yoshiko Kido, International Christian University, Tokyo, and myself. The rationale of the functional classification is to estimate those government expenditures which enhance the economy's productive capacity. Expenditures are divided into four broad functional categories: developmental, disaster repair and prevention, social welfare, and general government. These four categories are subdivided to two levels of disaggregation. We were able to break down government fixed investment, government enterprise inventory investment, current domestic transfers and subsidies into 42 functional components. For constant price series, each functional component by economic type was deflated by separate price indexes. We followed the Economic Planning Agency's procedure for the official national accounts of assuming no productivity change in the provision of government services. Our results are generally comparable to the official national accounts estimates. The major difference is that we attribute considerably more fixed investment to local governments, and correspondingly less to the central level. Government expenditures had the following characteristics. Growth was rapid; in real terms the public sector use of the economy's resources in 1963 was 2.2 times more than in 1952. The elasticity of government expenditures to GNP was unity in current prices, slightly less in real terms. The government postwar share in GNP has been smaller than in European nations and, unlike them, was not rising. This reflects the underlying growth strategy of emphasis upon private business fixed investment. Government consumption expenditures declined relative to GNP, and investment rose. Developmental expenditures comprised the largest share (40–45 per cent) of the government total. The elasticities to GNP of government expenditures by economic and functional categories are provided and discussed. A simple test was made of the cyclical relationship of government expenditures (both total and by category) to GNP. The results suggest that government expenditures, rather than contra-cyclical, were pro-cyclical in effect.     

The Pattern of IMF Lending: An Analysis of Prediction Failures

In a constantly changing economic environment, a country's ability to undertake institutional reforms is crucial to maintain economic growth and to promote the welfare of its citizens. A wide range of determinants for institutional reforms have been identified. However, the impact of trust on reforms has not been fully addressed. We provide theoretical arguments why trust should influence institutional changes and test the relationship empirically. We find a significant positive relation between trust and the success of reforms with regard to government size, the legal system, and deregulation of private businesses and the labor market. Other policy fields are ambiguous.     

On indeterminacy and growth under progressive taxation and productive government spending

We examine the theoretical interrelations between equilibrium (in)determinacy and economic growth in a one‐sector representative‐agent model of endogenous growth with progressive taxation of income and productive flow of public spending. We analytically show that, if the demand‐side effect of government purchases is weaker, the economy exhibits an indeterminate balanced‐growth equilibrium and belief‐driven growth fluctuations when the tax schedule is sufficiently progressive or regressive. If the supply‐side effect of public expenditures is weaker, indeterminacy and sunspots arise under progressive income taxation. In sharp contrast to traditional Keynesian‐type stabilization policies, our analysis finds that raising the tax progressivity may destabilize an endogenously growing economy with fluctuations driven by agents’ self‐fulfilling expectations.     

Productivity and R&D: an econometric evidence from Spanish firm-level data

This article analyses the relationship between productivity growth and R&D investments of Spanish manufacturing firms during the 1990s. The theoretical model is a version of the Cobb–Douglas production function in its growth rate form. The purpose is to estimate the rate of return to R&D expenditures. The econometric specification is a distributed lag model. The estimation applies the generalized method of moments method. The main empirical finding is that a positive and significant role is played by R&D expenditures on productivity growth. The rate of return to R&D expenditures is 26.598%.