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Please use this identifier to cite or link to this item: http://hdl.handle.net/10400.5/3780

Title: Economic performance and government size
Authors: Afonso, António
Jalles, João Tovar
Keywords: Growth
Institutions
Fiscal rules
Pooled mean group
Common correlated effects
Issue Date: 2011
Publisher: ISEG - Departamento de Economia
Citation: António Afonso e João Tovar Jalles. 2011. "Economic performance and government size". Instituto Superior de Economia e Gestão - DE working papers nº21-2011/DE/UECE
Series/Report no.: DE Working papers;21/2011/DE/UECE
Abstract: We construct a growth model with an explicit government role, where more government resources reduce the optimal level of private consumption and of output per worker. In the empirical analysis, for a panel of 108 countries from 1970-2008, we use different proxies for government size and institutional quality. Our results, consistent with the presented growth model, show a negative effect of the size of government on growth. Similarly, institutional quality has a positive impact on real growth, and government consumption is consistently detrimental to growth. Moreover, the negative effect of government size on growth is stronger the lower institutional quality, and the positive effect of institutional quality on growth increases with smaller governments. The negative effect on growth of the government size variables is more mitigated for Scandinavian legal origins, and stronger at lower levels of civil liberties and political rights. Finally, for the EU, better overall fiscal and expenditure rules improve growth.
URI: http://hdl.handle.net/10400.5/3780
ISSN: 0874-4548
Publisher version: https://aquila.iseg.utl.pt/aquila/getFile.do?method=getFile&fileId=231090&contentContextPath_PATH=/departamentos/ec/lateral/menu-working-papers/nova-serie/2011&_request_checksum_=3c1395346265a9ac4c07b6307180703b54a806d6
Appears in Collections:UECE - Documentos de Trabalho / UECE - Working Papers
DE - Documentos de trabalho / Working Papers

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