Does the composition of government expenditure matter for long-run GDP levels?

Richard, Kneller and Norman, Gemmell and Ismael, Sanz (2015) Does the composition of government expenditure matter for long-run GDP levels? Oxford Bulletin of Economics and Statistics . ISSN 1468-0084 (In Press)

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Abstract

We examine the long-run GDP impacts of changes in total government expenditure and in the shares of different spending categories for a sample of OECD countries since the 1970s, taking account of methods of financing expenditure changes and possible endogenous relationships. We provide more systematic empirical evidence than available hitherto for OECD countries, obtaining strong evidence that reallocating total spending towards infrastructure and education is positive for long-run output levels. Reallocating spending towards social welfare (and away from all other expenditure categories pro-rata) may be associated with modest negative effects on output in the long-run.

Item Type: Article
Keywords: government expenditure composition, fiscal policy, GDP
Schools/Departments: University of Nottingham UK Campus > Faculty of Social Sciences > School of Economics
Identification Number: https://doi.org/10.2139/ssrn.2484917
Depositing User: Kneller, Richard
Date Deposited: 23 Nov 2015 09:18
Last Modified: 13 Sep 2016 15:15
URI: http://eprints.nottingham.ac.uk/id/eprint/30878

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