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Long Swings In The Growth Of Government Expenditure: An International Historical Perspective

Author

Listed:
  • Marco Gallegati

    (Department of Economics and Social Sciences, Universita' Politecnica delle Marche (Italy))

  • Massimo Tamberi

    (Department of Economics and Social Sciences, Universita' Politecnica delle Marche (Italy))

Abstract
Using an international historical perspective this study aims at identifying the main empirical regularities, as well as countries' similarities and differences, in the long-run growth pattern of government expenditure, in order to distinguish among existing, competing theories of government growth. The application of nonparametric and parametric analyses to a sample of developed countries observed over the 1880-2011 period allows us to detect two main findings. The first is that, beyond the long-term growth of government expenditures in absolute terms, there is evidence of three expansionary long waves corresponding to the pre-armament booms in the WWs periods and the "golden age of public sector intervention". The latter is the reduction of the degree of cross-country heterogeneity in the pattern of relative and absolute growth of government expenditure since the 1960s. The "ratchet phenomenon" in the pre-WWII period and the change of the prevailing ideology from market failures to government failures in the more recent period provide explanations complementary to Wagner's law and consistent with the observed long-term evolution of the relative (and absolute) growth of government expenditure.

Suggested Citation

  • Marco Gallegati & Massimo Tamberi, 2020. "Long Swings In The Growth Of Government Expenditure: An International Historical Perspective," Working Papers 447, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    • Handle: RePEc:anc:wpaper:447
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    More about this item

    Keywords

    Keywords: Wagner's Law; Government expenditures; Local nonparametric regression analysis; Cointegration test;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative

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