Public spending reallocations and economic growth across different income levels

Acosta-Ormaechea, Santiago and Morozumi, Atsuyoshi (2017) Public spending reallocations and economic growth across different income levels. Economic Inquiry, 55 (1). pp. 98-114. ISSN 1465-7295

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Abstract

This paper examines the effects of public spending reallocations on economic growth. Assembling a disaggregated public spending dataset of 83 countries over the 1970-2011 period, we show that spending reallocations towards education, from health and social protection, have significant growth-promoting effects across a wide range of countries' income levels. However, income heterogeneity matters, particularly when reallocations involve infrastructure spending. Specifically, a reallocation from this spending to education also promotes growth, albeit primarily when the income level is low. This occurs because the effects of infrastructure spending are particularly weak in low-income countries, possibly due to the low quality of governance.

Item Type: Article
Additional Information: This is the peer reviewed version of the following article: Acosta‐Ormaechea, S. and Morozumi, A. (2017), PUBLIC SPENDING REALLOCATIONS AND ECONOMIC GROWTH ACROSS DIFFERENT INCOME LEVELS. Economic Inquiry, 55: 98-114. doi:10.1111/ecin.12382, which has been published in final form at https://doi.org/https://onlinelibrary.wiley.com/doi/10.1111/ecin.12382. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Keywords: Public spending reallocation; Economic growth; Education spending; Infrastructure spending; Income heterogeneity; Governance quality
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > School of Economics
Identification Number: https://doi.org/10.1111/ecin.12382
Depositing User: Eprints, Support
Date Deposited: 19 Jul 2016 09:54
Last Modified: 03 Aug 2018 04:30
URI: http://eprints.nottingham.ac.uk/id/eprint/35165

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