This paper develops a non-linear theoretical relationship between public spending and economic growth. The model identifies the “optimal” size of government and the “optimal” composition of government spending. Given the size of the government, different allocations of public resources lead to different growth rates in the transition dynamics, depending on their elasticity. We argue that neglecting the hypothesis of non-linearity and the different impact different kinds of public spending have on economic performance results in models which suffer from mis-specification. Traditional linear regression analysis may thus be biased.

Government size and the composition of public spending in a neoclassical growth model / Medda, Giuseppe; Carboni, Oliviero Antonio. - 2007:01(2007), p. 24.

Government size and the composition of public spending in a neoclassical growth model

Medda, Giuseppe;Carboni, Oliviero Antonio
2007-01-01

Abstract

This paper develops a non-linear theoretical relationship between public spending and economic growth. The model identifies the “optimal” size of government and the “optimal” composition of government spending. Given the size of the government, different allocations of public resources lead to different growth rates in the transition dynamics, depending on their elasticity. We argue that neglecting the hypothesis of non-linearity and the different impact different kinds of public spending have on economic performance results in models which suffer from mis-specification. Traditional linear regression analysis may thus be biased.
2007
Government size and the composition of public spending in a neoclassical growth model / Medda, Giuseppe; Carboni, Oliviero Antonio. - 2007:01(2007), p. 24.
File in questo prodotto:
File Dimensione Formato  
Carboni_O_Working_Paper_2007_Government.pdf

accesso aperto

Tipologia: Versione editoriale (versione finale pubblicata)
Licenza: Non specificato
Dimensione 450.96 kB
Formato Adobe PDF
450.96 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11388/264638
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
social impact