Year: 2015
Type: article
Abstract: The aim of the paper is to fi nd out what is the effect of different types of government spending and taxes on economic growth in developed economies. The analysis is performed on a sample of 27 OECD countries in the period 1997-2011. It is based on the neoclassic growth model extended with the level of human capital and fi scal variables. Those include particular types of government spending (according to the COFOG classifi cation) and taxes (according to the OECD classifi cation), and state budget defi cit. From a methodological point of view, panel data estimation is used. We support the view that only some types of government spending are growth-enhancing, and only if they are fi nanced through indirect taxes. However, the results show that only expenditure on defense, education and health, and general public services may be labeled as productive. In addition, we show that direct taxes, especially corporate taxes, negatively affect the growth, also in case they are used to fi nance productive spending.
Source: Politická ekonomie
Authors: Agata Drobiszová, Zuzana Machová
Institution: VSB - Technical University of Ostrava
Language: Czech
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W2201851471