Can a Government Enhance Long-run Growth by Changing the Composition of Public Expenditure?

Santiago Acosta-Ormaechea and Atsuyoshi Morozumi ()

No 2013/01, Discussion Papers from University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM)

Abstract: This paper examines the impact of a compositional change in public expenditure on long-run growth. To do this, we construct a new dataset based on the IMF's government finance statistics (GFS) yearbook covering the period 1970-2010 for 56 countries (14 low-, 16 medium-, and 26 high-income countries). We then study the causal effects of changes in the composition of expenditure on growth using generalized-method-of-moments (GMM) dynamic panel estimators. Our main finding is that a government can promote long-run growth by increasing education spending offset by a fall in social spending (i.e., health and social protection). An increase in public spending on infrastructure, however, does not appear to enhance growth when compensated by a fall in spending on other components, most notably education and social spending.

Date: 2013-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://www.nottingham.ac.uk/cfcm/documents/papers/13-01.pdf (application/pdf)

Related works:
Working Paper: Can a Government Enhance Long-Run Growth by Changing the Composition of Public Expenditure? (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:not:notcfc:13/01

Access Statistics for this paper

More papers in Discussion Papers from University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM) School of Economics University of Nottingham University Park Nottingham NG7 2RD. Contact information at EDIRC.
Bibliographic data for series maintained by Hilary Hughes ().