SIZE OF GOVERNMENT, GOVERNMENT FAILURE, AND ECONOMIC GROWTH

Year 2016, Volume: 8 Issue: 2, 210 - 230, 01.12.2016

İbrahim Demir , Coşkun Can Aktan

Abstract

This study analyzes the relationship between the size of government sector and economic performance in connection with government failure. The study connects the size of government and economic growth to inefficiencies on the demand-side and supply-side of collective decision mechanism. It also empirically analyzes the relationship between the size of government and economic growth for the period 1972-2015. Through an error correction estimation that utilized global level data from the World Bank, the study found that the share of per capita government expenditure in per capita Gross Domestic Product (GDP) and per capita GDP growth had a long-term equilibrium relationship and size of government impacted per capita GDP growth negatively in the long-run.

Keywords

Size of government, public expenditures, growth of government

References

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