Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153282
Authors: 
Afonso, António
González Alegre, Juan
Year of Publication: 
2008
Series/Report no.: 
ECB Working Paper 848
Abstract: 
In this paper we test whether a reallocation of government budget items can enhance long-term GDP growth in a set of European countries. We apply modern panel data techniques to the period 1970-2006, and we use three alternative dependent variables in a growth regression: economic growth, total factor productivity and labour productivity. Our results are able to identify also the distortions induced by public expenditure in the private factors allocation. In particular, we detect a strong crowding-in effect associated to public investment, which have enhanced economic growth by boosting private investment. We also associate a significant dependence of productivity on public expenditure on education as well as the role of social security and health issues in growth and the labour market.
Subjects: 
Economic Growth
fiscal policy
panel models
JEL: 
C23
E62
H50
O40
Document Type: 
Working Paper

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