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Does the Composition of Government Expenditure Matter for Long-Run GDP Levels?

Sanz, Ismael; Gemmell, Norman; Kneller, Richard; Norman, Gemmell; Ismael, Sanz

Authors

Ismael Sanz

Norman Gemmell

Gemmell Norman norman.gemmell@vuw.ac.nz

Sanz Ismael ismael.sanz@urjc.es



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.

Journal Article Type Article
Publication Date Aug 23, 2014
Journal SSRN Electronic Journal
Print ISSN 0305-9049
Electronic ISSN 1468-0084
Publisher Wiley
Peer Reviewed Not Peer Reviewed
APA6 Citation Sanz, I., Gemmell, N., Kneller, R., Norman, G., & Ismael, S. (2014). Does the Composition of Government Expenditure Matter for Long-Run GDP Levels?. Oxford Bulletin of Economics and Statistics, https://doi.org/10.2139/ssrn.2484917
DOI https://doi.org/10.2139/ssrn.2484917
Keywords government expenditure composition, fiscal policy, GDP
Publisher URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2484917
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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