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| Author: | Ghosh, S. Gregoriou, A. |
| Title: | The composition of government spending and growth: Is current or capital spending better? |
| Journal: | Oxford Economic Papers
2008 : JUL, VOL. 60:3, p. 484-516 |
| Index terms: | fiscal policy public expenditure growth capital models developing countries |
| Language: | eng |
| Abstract: | In this paper, optimal fiscal policy is analytically characterized for a decentralized economy, whereby the optimal values of the growth rate, tax rate and expenditure shares on the two public goods are linked directly to their productivity parameters. Based on panel data of 15 developing countries over 28 years, it is shown through GMM techniques, that current capital spending has positive/negative and significant effects on the growth rate, in contrast to commonly views. For example, spending on operations and maintenance has a stronger impact on growth than both health and education spending etc. |
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