European Sociological Review 2:52-60 1986
© 1986 Oxford University Press
research-article |
What can we learn from international comparisons of public sector size and economic performance?
University of Sydney, Department of Economics Sydney, NSW, Australia 2006
This paper adopts a critical approach to the use of simple aggregate cross-country regression analysis to investigate the relationships between public sector size and economic performance. As an illustration of the general propositions advanced, the relationship between the size of government expenditures relative to GDP and economic growth performance is investigated. The results indicate how sensitive any conclusions are to the measure of government size selected, the time-period investigated and the countries included in the sample. Such factors, in combination with a lack of rigour in specification and evaluation of hypotheses, explain the divergency of results produced by earlier studies adopting the cross-country framework. It is concluded that while the results show the lack of any simple relationship between public sector size and economic performance, further investigation is required which goes beyond the bounds imposed on the simple cross-country regression approach.
Manuscript received: September 17, 1985.
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