Government and Growth : Friend or Foe?
| Résumé |
The size of the State in industrialized economies has grown
dramatically during the past century giving rise to legitimate
fears that such a trend might end up having an adverse impact on
growth. This chapter explores the relationship between the
development of government activities and economic growth. It starts
by evoking problems related to the measurement of the public sector
before reviewing statistical evidence on the long-term growth of
the share of the State in the economy. It then provides a number of
explanations for this phenomenon including those pertaining to the
functioning of the political system itself thereby pointing towards
inefficiencies. The next step is to explore the principal avenues
along which government interventions can positively or negatively
interfere with the growth potential of the economy. It turns out
that while public expenditures – especially those responding to
market failures – tend to be favorable to growth, most taxes are
growth-hindering. The final part of the chapter singles out some
pitfalls in the empirical investigation of this relationship. The
conjecture is that the nonlinear and possibly endogenous nature of
the hypothesized relationship can explain the lack of consensus in
empirical studies conducted so far. |
| Mots-clés |
government growth, public expenditure, taxes, economic growth |
| Citation | Zarin-Nejadan, M. (2011). Government and Growth : Friend or Foe?. In Economic Growth and Development. (Vol. 11, pp. 557-581). Bingley: Emerald. |
| Type | Chapitre de livre (Anglais) |
| Année | 2011 |
| Titre du livre | Economic Growth and Development |
| Editeur commercial | Emerald (Bingley) |
| Volume | 11 |
| Pages | 557-581 |
| Titre de la collection | Frontiers of Economics and Globalization |