Government Size, Composition, Volatility and Economic Growth

By António Afonso, Davide Furceri. Social Science Research Network, 2008

577 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/d715c1df50bc2c3aadefeac4dce06a3478d59ff7

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Citations in the corpus

Oil shocks and stock markets: dynamic connectedness under the prism of recent geopolitical and economic unrest (2017, background): “This could potentially be explained on the basis of the importance of current availability of oil during periods of recession for net oil–exporting countries (see, among others, Antonakakis et al., 2014; Afonso and Furceri, 2010; Sturm et al., 2009), as well as, on the events that have taken place s”
Dynamic spillovers of oil price shocks and economic policy uncertainty (2014, result): “A potential explanation of this result may lie within the arguments put forward by authors such as Auty and Gelb (2001), Lane (2003), as well as, Afonso and Furceri (2010) who identify a strong link between resource–revenues – such as revenues from oil – and fiscal policy. To elaborate further, Stur”
Government Size and Growth: A Survey and Interpretation of the Evidence (2011, unknown): “Hansson and Henrekson (1994) examined fourteen rich countries over the 1970–1987 period, and concluded that government transfers, consumption, and total expenditure are consistently negatively related to growth of total factor productivity, whereas educational expenditure has a positive effect.”
Has the Fed Been a Failure (2012, unknown): “Thus Afonso and Furceri (2008) find, based on estimates for the period 1970–2004, that for the OECD countries a one percentage point increase of the share of government expenditure to total GDP was associated with a .12 percentage point decline in real per capita growth.”
Monetary Science, Fiscal Alchemy ∗ (2010, unknown): “In a study of 28 industrial countries, Afonso and Furceri (2008) report that South Korea had the smallest ratio of general government expenditures Leeper: Monetary Science, Fiscal Alchemy to GDP in 2005 (29.1 percent) and Sweden had the largest (56.3 percent).”