Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/18161 
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dc.contributor.authorFic, Tatianaen
dc.contributor.authorGhate, Chetanen
dc.date.accessioned2009-01-28T15:39:46Z-
dc.date.available2009-01-28T15:39:46Z-
dc.date.issued2004-
dc.identifier.urihttp://hdl.handle.net/10419/18161-
dc.description.abstractCan a growing welfare state induce a regime switch in the growth rate of an economy? This paper constructs a dynamic political economy model of economic growth and the welfare state in which both variables are non-linearly related and jointly endogenous. Using a Markov switching framework over the period 1950-2001, we find that the structural decline in growth rates that several welfare state economies experienced during 1970-1975 are preceded by movements to a high welfare state regime. This suggests that expanding welfare state regimes are associated with low economic growth regimes, while contracting welfare state regimes are associated with high growth regimes. However, we also find that the structural decline in growth rates leads to a downward structural break in the welfare state for many welfare state economies. This suggests that declining growth regimes are associated with contracting welfare state regimes, as lower growth forces politicians to cut the size of the welfare state. We also report strong evidence that both expansion and contractions in the welfare state affects growth non-linearly. These results are able to characterize a predictable and general pattern of welfare state?growth evolution.en
dc.language.isoengen
dc.publisher|aDeutsches Institut für Wirtschaftsforschung (DIW) |cBerlinen
dc.relation.ispartofseries|aDIW Discussion Papers |x424en
dc.subject.jelC22en
dc.subject.jelE62en
dc.subject.jelO40en
dc.subject.jelP16en
dc.subject.ddc330en
dc.subject.keywordWelfare Stateen
dc.subject.keywordStructural Changeen
dc.subject.keywordRegime Switching Modelsen
dc.subject.keywordPositive Political Economyen
dc.subject.keywordEndogenous Growthen
dc.subject.stwSozialstaaten
dc.subject.stwWirtschaftswachstumen
dc.subject.stwStaatsquoteen
dc.subject.stwNeue Wachstumstheorieen
dc.subject.stwPublic Choiceen
dc.subject.stwSchätzungen
dc.subject.stwTheorieen
dc.subject.stwOECD-Staatenen
dc.subject.stwregime switching modelen
dc.titleThe Welfare State, Thresholds, and Economic Growth-
dc.typeWorking Paperen
dc.identifier.ppn389379859en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:diw:diwwpp:dp424en

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