Chris
12-03-2016, 03:06 PM
New paper from the OECD: THE EFFECT OF THE SIZE AND THE MIX OF PUBLIC SPENDING ON GROWTH AND INEQUALITY (http://www.oecd.org/eco/public-finance/WKP%201344.pdf) (.pdf)
...On the size and effectiveness of government
Larger governments are associated with lower long-term growth. Larger governments also slowdown the catch-up to the productivity frontier.
The adverse growth effect of large governments can be offset, if countries have well-functioning governments (e.g. the Nordic countries). A high degree of spending decentralisation also mitigates the adverse growth effect of large governments.
In the countries with the most effective governments, the large size of the government promotes equity with no adverse effect on growth. This likely reflects that larger governments tend to redistribute more, and that better functioning governments tend to better target transfer programmes to disadvantaged groups.
In countries with less effective governments, improving government effectiveness can both increase growth and reduce inequality. In these countries, reducing the size of government increases income of all. Nonetheless, it benefits less those with lower income as smaller governments tend to redistribute less.
...
...On the size and effectiveness of government
Larger governments are associated with lower long-term growth. Larger governments also slowdown the catch-up to the productivity frontier.
The adverse growth effect of large governments can be offset, if countries have well-functioning governments (e.g. the Nordic countries). A high degree of spending decentralisation also mitigates the adverse growth effect of large governments.
In the countries with the most effective governments, the large size of the government promotes equity with no adverse effect on growth. This likely reflects that larger governments tend to redistribute more, and that better functioning governments tend to better target transfer programmes to disadvantaged groups.
In countries with less effective governments, improving government effectiveness can both increase growth and reduce inequality. In these countries, reducing the size of government increases income of all. Nonetheless, it benefits less those with lower income as smaller governments tend to redistribute less.
...