GOVERNMENT SPENDING AND ECONOMIC-GROWTH

This study reviewed recent empirical studies providing fresh evidence of the impact of government spending on economic growth. It is followed by a new theoretical synthesis and this as well as the other models, are in turn subjected to empirical validation. The empirical validation is conducted for both developed and less-developed economies based on simultaneous equations as well as single equation models, with or without adjusting for differences in the total factor productivity growth. Government size is estimated to have positive impact on economic growth in the short-run but not in the intermediate-run (25 years in this study).