Government size, composition, volatility and economic growth |
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| Authors: | Antnio Afonso Davide Furceri |
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| Institution: | a ISEG/TULisbon — Technical University of Lisbon, Department of Economics; UECE — Research Unit on Complexity and Economics, R. Miguel Lupi 20, 1249-078 Lisbon, Portugal;b Directorate General Economics, European Central Bank, Kaiserstraße 29, D-60311 Frankfurt am Main, Germany;c OECD, 2 rue André-Pascal, 75775 Paris Cedex 16, France;d Department of Economics, University of Palermo, Italy |
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| Abstract: | This paper analyses the effects in terms of size and volatility of government revenue and spending on growth in OECD and EU countries. The results of the paper suggest that both variables are detrimental to growth. In particular, looking more closely at the effect of each component of government revenue and spending, the results point out that i) indirect taxes (size and volatility); ii) social contributions (size and volatility); iii) government consumption (size and volatility); iv) subsidies (size); and v) government investment (volatility) have a sizeable, negative and statistically significant effect on growth. |
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| Keywords: | Fiscal policy Government size Fiscal volatility Economic growth |
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