Government size, public debt and real economic growth: A panel analysis

Department

Business Administration

Document Type

Article

Publication Source

Journal of Economic Studies

Publication Date

2012-08-01

Volume

39

Issue

4

First Page

410

Last Page

419

Abstract

Purpose: The purpose of this paper is to examine the impact of the size of government and public debt on real economic growth, for a panel of 175 countries around the world. Design/methodology/approach: The paper utilizes the fixed-effects and random-effects techniques to estimate the panel regressions. Findings: The results indicate that both the size of government and the extent of government indebtedness have negative effects on economic growth. Practical implications: The findings suggest that the authorities ought to take the necessary steps to curtail excessive government spending and public debts, in order to promote economic growth. Originality/value: The contribution of the paper is its application of the fixed- and random-effects techniques in modeling the relation of real economic growth to the size of government and public debt, for a panel of 175 countries around the world. © Emerald Group Publishing Limited.

Keywords

Economic growth, Fixed effects, Government, Public debt, Public finance, Random effects, Real economic growth

DOI

10.1108/01443581211255620

https://doi.org/10.1108/01443581211255620

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