OPTIMAL GOVERNMENT SIZE IN EUROPEAN UNION IN INTERACTION WITH ECONOMIC GROWTH

Fiscal policy for many countries has become a major macroeconomic tool with which it is possible to influence the whole economy. The importance of the instrument is among the countries of the European Union and especially in the countries of Economic and monetary union because of the fact that the countries adopting the euro as a national currency, they gave up the creation of an independent monetary policy. The relationship between the size of government and economic growth is discussed topic among academics. The present contribution of shifts given problem a bit further; and is not intended only to determine the correlation, but also to determine the optimal size of government maximizing economic growth. In this paper the optimal size of government was determined at intervals of 45.49% and 52.06% for member countries of European Union.