This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Citation Map Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Castles, F. G. Articles by Dowrick, S. Search for Related Content Social Bookmarking                         What's this?

The Impact of Government Spending Levels on Medium-Term Economic Growth in the Oecd, 1960-85

Steve Dowrick

Recent findings concerning the impact of government spending on economic growth have been as diverse as the theories underpinning them. Proceeding from a methodological critique of prior work in the field and drawing on a variety of methodological innovations suggested in recent studies, we seek to design rigorous tests using cross-section data from 18 OECD countries over four business cycles between 1960 and 1985. Government expenditure is decomposed into various categories and economic growth is corrected for cyclical disturbances. We also control for the effects of technological catch-up, institutional sclerosis and population growth along with the mediating influences of investment and employment. A variety of diagnostic statistical tests are applied, including tests for parameter stability across countries and across periods and tests for heteroscedasticity, functional form, outliers and endogeneity. We reject the hypothesis that government expenditures reduce economic growth and indicate some areas of social expenditures which may possibly tend to increase growth. We are also able to indicate the methodological assumptions and restrictions which have led to previous contrary findings.

Key Words: economic growth • government spending • diagnostic tests

Journal of Theoretical Politics, Vol. 2, No. 2, 173-204 (1990)
DOI: 10.1177/0951692890002002003


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?

This article has been cited by other articles:

				F. G. Castles and H. Obinger Social expenditure and the politics of redistribution Journal of European Social Policy, August 1, 2007; 17(3): 206 - 222. [Abstract] [PDF]

				R. Kneller The Implications of the Comprehensive Spending Review for the Long-Run Growth Rate: a View From the Literature National Institute Economic Review, January 1, 2000; 171(1): 94 - 105. [Abstract] [PDF]

				J. Carritte and J. B. Willianison An Analysis of the Impact of Public Pension Spending on Economic Growth in the Affluent Democracies 1960-1988 International Journal of Comparative Sociology, March 1, 1995; 36(1-2): 82 - 95. [Abstract] [PDF]

				F. G. Castles Democratic Politics, War and Catch-Up: Olson's Thesis and Long-Term Economic Growth in the English-Speaking Nations of Advanced Capitalism Journal of Theoretical Politics, January 1, 1991; 3(1): 5 - 25. [Abstract]