The composition of public expenditure and economic growth

Devarajan, Shantayanan; Swaroop, Vinaya; Zou, Heng-Fu

doi:10.1016/s0304-3932(96)90039-2

Cited by 994 publications

(878 citation statements)

References 13 publications

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“…It also lends support for theories that there are both 'productive' and 'unproductive' components of government spending [33]. However, in contrast with previous casestudy estimates of the fiscal multipliers associated with defence spending in the United States [3,18,19], we estimated negative fiscal multipliers for military spending in Europe.…”

Section: Discussionsupporting

confidence: 54%

Does investment in the health sector promote or inhibit economic growth?

Reeves

Basu

Meissner

et al. 2013

European Journal of Public Health

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Background: Is existing provision of health services in Europe affordable during the recession or could cuts damage economic growth? This debate centres on whether government spending has positive or negative effects on economic growth. In this study, we evaluate the economic effects of alternative types of government spending by estimating "fiscal multipliers" (the return on investment for each $1 dollar of government spending).

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Section: Discussionsupporting

confidence: 54%

Does investment in the health sector promote or inhibit economic growth?

Reeves

Basu

Meissner

et al. 2013

European Journal of Public Health

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“…Even when a sizeable proportion of public spending in an economy is attributed to government investment, our results may be vindicated when a shift towards an a priori more productive category of spending may not raise the growth rate if its initial share is too high (Devarajan et al, 1996), or if optimizing governments misperceive the productivities of the different types of public goods and allocate their expenditures out of line with their productivities (Ghosh and Gregoriou, 2008). …”

Section: Sufficient Condition For a Quadratic Relationshipmentioning

confidence: 86%

Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries

2015

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We revisit the relationship between financial development and economic growth in a panel of 52 middle-income countries over the 1980-2008 period. Using pooled mean group estimations in a dynamic heterogeneous panel setting, we show that there is an inverted U-shaped relationship between finance and growth in the long-run. In the short run, the relationship is insignificant. This suggests that too much finance can exert a negative influence on growth in middle-income countries. The finding of a non-monotonic effect of financial development on growth is confirmed by estimating a threshold model.

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“…on economic growth. Some of these studies suggest that public sector consumption is negatively related with economic growth [Barro (1991); Levine and Renelt (1992); Kneller et al (1999)], while others suggest the opposite [Devarajan (1996)]. …”

Section: Previous Literaturementioning

confidence: 99%

“…Similarly, though assumed axiomatically to have a positive impact in boosting private productivity, public investment is found to have a positive effect on economic growth [Aschauer (1989); Barro (1991); Easterly and Rebelo (1993); Kneller et al (1999)], and a negative effect in others [Devarajan (1996)]. Education indicators are also subject to conflicting results.…”

Section: Previous Literaturementioning

confidence: 99%

Distributional Effects of Growth and Public Expenditures in Africa: Estimates for Tanzania and Rwanda

Almanzar

Torero

2017

World Development

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In this paper we explore the effects of fiscal policies and growth on measures of the household welfare across the distribution of expenditure for two countries in Africa: Rwanda and Tanzania. We explore issues of inefficiency in government expenditures and dilution of growth benefits among the better off sectors of the population in these two countries (in lieu of the poor sectors) by looking at the effects within a country and across different groups of households and administrative entities. We exploit variation in expenditures and growth across and within regions of each country to estimate the elasticities of income with respect to these expenditures at different points of the expenditure distribution, using household survey data and government expenditure at the district level. We find that overall, mean income growth benefits the top income groups. The welfare spillovers are mostly present for top 20% of the income distribution, with the middle of the distribution in Tanzania responding slightly to these spillovers. Social Public expenditures does not affect inequality in a considerable manner, but tend to work towards decreasing inequality. However, mean income growth is related to 'increases' in inequality in the sense that the richest sectors of the population benefit the most from growth. We find that the growth elasticity of income is only above one for the top quintile in both countries. In Tanzania a 1% increase in average household expenditure is related to a 1.96% expenditure growth in the top quintile and 0.43% in the third quintile. While in Rwanda it is related to a 1.93% increase in household expenditure in the top 20% of the distribution.

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The composition of public expenditure and economic growth

Cited by 994 publications

References 13 publications

Does investment in the health sector promote or inhibit economic growth?

Does investment in the health sector promote or inhibit economic growth?

Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries

Distributional Effects of Growth and Public Expenditures in Africa: Estimates for Tanzania and Rwanda

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