The composition of public expenditure and growth: different models of government expenditure distribution by functions.
Sanz, Ismael; Velázquez, Francisco J
This paper provides a brief survey of the influence on economic growth of the composition of public expenditure by functions, concluding that countries tend towards a similar distribution in the steady state. In this light, we explore the existence of convergence in the structure of government spending in the OECD countries for the period 1970-1997 and the prospects of this process persisting in the future. The results obtained through the dissimilarity index, using the usual convergence indicators, and by means of cluster analysis point to the existence of a convergence process in the structure of government expenditure by functions. Nevertheless, we find that countries are approaching different equilibrium states in which two main models can be differentiated: one for some of the State members of the European Union (EU), and the other for almost the rest of the OECD countries. This suggests that there exist individual factors that impede convergence to a single distribution in the long run.
Publisher: University of Otago
Series number: 115
Keywords: government spending; clusters; convergence; functions of public expenditure; OECD
Research Type: Discussion Paper