AbstractGovernment spending plays an important role in determining economic performances in China. Its macroeconomic effects are analysed in this paper. We show that government spending in China Granger‐causes output, consumption and investment booms as well as inflation, and has a multiplier larger than 1. The large multiplier effects are found not only in aggregated time‐series data but also in panel data at the provincial level. We also provide a theoretical model and Monte Carlo analysis to rationalize our empirical findings. Our theoretical and Monte Carlo analyses support the large multiplier found in China but also suggest that government spending is not necessarily a free lunch in spite of the large multiplier effects.
AbstractWe estimate the effect of government spending on firm production as measured by the value of sales in developing economies. We contribute to the literature by exploring the relationship between the size and composition of government spending on firm sales by workforce size and market destination of goods using instruments based on political institutions and fractionalization. We use a unique firm‐level dataset across developing economies coupled with national government spending data. After instrumenting for the fiscal policies, we find that an increase in the proportion of spending that alleviates market failures significantly boosts sales output especially in non‐exporting small and medium sized firms but not in large exporting firms. Total government spending positively affects sales output for firms of all sizes and non‐exporters. The effect of the composition of government spending on firm output is more elastic than the effect of the size of government spending. The results are explained by the role of government spending in increasing bank loan access, allowing for technological innovation, and augmenting human capital thereby increasing firm output.
We examine the use of pension obligation bonds (POBs) as a financing strategy to address the effects of unfunded pension liabilities on government operating budgets. POBs are publicly marketed as money‐saving mechanisms that reduce pension system payments while allowing for increased spending on other government priorities. We review general POB usage and examine whether POBs altered school district spending patterns in Oregon and Indiana. Our results indicate that districts issuing POBs have not increased educational spending relative to other districts. Because POBs cost money to issue and manage, decision makers are encouraged to consider annual budgetary effects prior to issuance.
A central question in the empirical fiscal policy literature is the magnitude, in fact even the sign, of the fiscal multiplier. Standard identification schemes for fiscal VAR models typically imply positive output as well as labor productivity responses to expansionary government spending shocks. The standard macro assumption of decreasing returns to labor, however, implies that expansionary government spending shocks should lead to increasing output and hours, but to decreasing labor productivity. To potentially reconcile theory and empirical analysis we impose, amongst other sign restrictions, opposite signs of the impulse responses of output and labor productivity to government spending shocks in eight- to ten-variable VAR models, estimated on quarterly US data. Doing so leads to contractionary effects of positive government spending shocks. This potentially surprising finding is robust to the inclusion of variable capital utilization rates and total factor productivity.
We first introduce centgovspend, an open source software library which provides functionality to automatically scrape and parse central government spending within the United Kingdom at the micro and meso levels. The library then optionally reconciles suppliers and subsequently analyzes payments made to private entities. We briefly discuss the policy environment surrounding the library before explaining the modular structure, implementation and execution which results in scraping over 4.9m payments worth over £3.5tn in value. We then provide two prototype applications in the fields of public administration and sociology; one of which analyzes government procurement across Standard Industry Classifier (SIC) and one which analyzes the social stratification of company officers and persons of significant control who supply the government. The project acts as a prototype in an international context, aiming to highlight an unrealised possibility of 'Big, Open Data' for public policy making and government efficiency.
The objective of this study is to analyse the impact of various types of government spending on growth and poverty reduction, using provincial level data over the last decade. Government spending reduces poverty through many channels such as agricultural growth and improved nonfarm employment. We will try to capture all these different effects in the analysis if the data allow. This paper opens with a review of Vietnam's economic reforms and growth over the past decade. We then sketch Vietnam's poverty profile, highlighting changes over time, regional distribution, and differences among population groups. In the next two chapters, we will review the trend and composition of government spending, agricultural R&D and infrastructure endowments in Vietnam over the last decade. Chapter 5 presents the analytical framework used to estimate the effect of various types of government spending on growth and poverty reduction. The data, model estimation, and results are presented in chapter 6. We conclude the paper by offering future priorities for government investments in chapter 7.
Today, the role of government spending which is considered as the main instrument in the promotion of economic development is seen in the public investment budget (PIB). This study analyzes the role of the public investment spending in the economic growth of Cameroon. Specifically, it brings out the effect of Public and Private Investment on GDP growth in Cameroon. The role of the PIB as an instigator of economic growth should be clarified in order to justify government investment expenditure. Many studies have analysed the relationship between government spending and economic growth but the analysis of the composition of government spending and induced economic growth is an aspect of economic analysis which deserves more interest. This study analysis the effect of government investment spending on economic growth in Cameroon going from the components of the GDP5 and using VAR (Vector Auto Regressive) model. Our results show the intervals in which the various components of government spending have an effect on economic growth in Cameroon. We find that the lagged GDP and government investments have a positive effect on growth whereas private investments affect it negatively.
Trust in government, policy effectiveness and the governance agenda has rarely been more important than in the opening decades of the twenty first century. For that reason, we herein present centgovspend, an open source software library which provides functionality to automatically scrape and parse central government spending at the micro level. While the design ideals are internationally applicable to any future data origination pipelines, we specifically tailor it to the United Kingdom, a country which is unique not only in terms of its transparency in procurement, but also one which was subject to a parliamentary expenses scandal, years of austerity, and then a volatile political process regarding a referendum to leave the European Union. The library optionally reconciles suppliers and subsequently analyzes payments made to private entities. Our implementation results in scraping over 4.9m payments worth over £3.5tn in value. As a way of showcasing what such a dataset makes possible, we outline three prototype applications in the fields of public administration (procurement across Standard Industry Classifier), sociology (stratification across those who supply government) and network science (board interlock across suppliers) before presenting suggestions for the future direction of public procurement data origination and analysis.
Intro -- _GoBack -- _Ref310717193 -- The authors -- Foreword -- Summary -- Tables, figures and boxes -- 1 Introduction -- Philip Booth -- The growth of government spending -- Government spending, taxation and growth -- Recent trends in types of government spending -- Regional differences -- But what about austerity? -- Why does taxation affect economic growth? -- Tax and growth: the evidence -- Designing an effective tax system -- Conclusion -- References -- Part 1 -- The growth of government 1870-2020 -- 2 How should government spending and tax burdens be measured? -- David B. Smith -- Introduction -- It is government spending and not taxation that determines the burden of government activity -- No institution can tax itself -- How do we define the public sector? -- How do we define national output? -- The national accounts revolution: ESA 2010 -- Is there a best buy? -- 3 Historical trends in the government spending and tax ratios -- David B. Smith -- The international experience -- The British experience 1870-2015 -- Regional breakdown of UK government spending -- 4 And they call it austerity -- Ryan Bourne -- Introduction -- Government spending under the coalition -- Government spending under the Conservative government -- The reckoning up: government spending 2010/11 to 2019/20 -- Annex to Chapter 4 -- David B. Smith -- A misleading political myth in the austerity debate -- 5 Spending, tax and economic welfare -- David B. Smith -- Government expenditure by function -- Divergent consequences of the different forms of government spending -- Economic growth and the financing of government spending -- The size of government: maximising growth and welfare -- Conclusions -- References -- Part 2 -- Taxation and Growth: The Empirical Evidence -- 6 Tax and growth: theories and evidence -- Patrick Minford -- Introduction.
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This article uses unique voting data on 331 federal propositions to estimate voter preferences in Swiss cantons. We document that preferences vary systematically with cantonal characteristics. In particular, cantons whose voters are more conservative, less in favor of redistribution and less supportive of public spending tend to have stronger direct democracy. We show that voter preferences have a stable and sizable effect on government spending even conditional on many observable cantonal characteristics. We then revisit the relationship between direct democracy and public spending. Once we fully control for voter preferences, the cross-sectional correlation between direct democracy and government spending declines by roughly 20%. The results in this article provide empirical support for models, in which both voter preferences and direct democratic institutions are important determinants of the size of government. [Copyright Elsevier B.V.]
Abstract.Using time series, cross-sectional econometric modelling, an analysis is made of competing political and economic determinants of Canadian provincial government fiscal policy during the 1980s and 1990s. It is determined that provincial government spending responses to trade liberalization are dependent upon the ideology of the government and conditioned by the degree of provincial unionization. When relatively high levels of unionization prevail, those governments that typically spend the most reduce total spending to a lowest common denominator. However, when unionization is low, provincial government spending responses to increasing trade openness is primarily compensatory. This is in contradiction to the "race to the bottom" theory. The contingent nature of the provincial government spending response to trade openness means that despite overall pressures for fiscal convergence, political, economic and regional factors continue to contribute to distinct provincial spending policies.Résumé.Cet article utilise une modélisation économétrique transversale en série chronologique pour analyser les déterminants politiques et économiques en compétition au niveau de la politique fiscale du gouvernement provincial canadien durant les années 1980 et 1990. Il est établi qu'en termes de dépenses publiques, les réactions du gouvernement provincial face à la libéralisation des échanges sont tributaires de l'idéologie du gouvernement et déterminées par le niveau de syndicalisation provincial. Lorsque le niveau de syndicalisation est relativement élevé, ce sont les gouvernements provinciaux qui dépensent le plus qui réduisent leurs dépenses totales au plus bas dénominateur commun. Par contre, plus le niveau de syndicalisation est bas, plus les dépenses publiques face à la libéralisation des échanges sont principalement compensatoires. Cela vient contredire la théorie du " nivellement par le bas ". La nature conditionnelle de la réaction du gouvernement provincial en termes de dépenses publiques signifie qu'en dépit des pressions globales pour la convergence fiscale, des facteurs politiques, économiques et régionaux continuent de contribuer aux politiques de dépenses publiques distinctes.
The authors argue that the government spending multiplier can be much larger than one when the zero lower bound on the nominal interest rate binds. The larger the fraction of government spending that occurs while the nominal interest rate is zero the larger the value of the multiplier. After providing intuition for these results they investigate the size of the multiplier in a dynamic stochastic general equilibrium model. In this model the multiplier effect is substantially larger than one when the zero bound binds. The model is consistent with the behavior of key macro aggregates during the recent financial crisis. Adapted from the source document.
In their 1990 Review article, Ian Budge and Richard Hofferbert analyzed the relationship between party platform emphases, control of the White House, and national government spending priorities, reporting strong evidence of a "party mandate" connection between them. Gary King and Michael Laver successfully replicate the original analysis, critique the interpretation of the causal effects, and present a reanalysis showing that platforms have small or nonexistent effects on spending. In response, Budge, Hofferbert, and Michael McDonald agree that their language was somewhat inconsistent on both interactions and causality but defend their conceptualization of "mandates" as involving only an association, not necessarily a causal connection, between party commitments and government policy. Hence, while the causes of government policy are of interest, noncausal associations are sufficient as evidence of party mandates in American politics.