As economists and policymakers strive to understand the causes of
the global financial crisis, pinpointing the relationship between
government size and economic growth is crucial. In this incisive
economic study, Andreas Bergh and Magnus Henrekson find that in
wealthy countries, where government size is measured as total taxes
or total expenditure relative to GDP, there is a strong negative
correlation between government size and economic growth-where
government size increases by 10 percentage points, annual growth
rates decrease by 0.5 to 1 percent. Bergh and Henrekson stress that
statistical correlations, even when highly significant, are not
law. Some countries with high taxes enjoy above-average growth, and
some countries with small governments have stagnant economies. The
Scandinavian welfare states, for example, have enjoyed steady
growth over the last decade despite their large governments.
However, these nations compensate for high taxes by employing
market-friendly policies in other areas, such as trade openness and
inflation control. Government Size and Economic Growth concludes
that, in every case, economic freedom is a crucial determinant of
economic growth_suggesting that government intervention in the
marketplace may be the wrong approach to solving the economic
crisis.
General
Imprint: |
AEI Press
|
Country of origin: |
United States |
Release date: |
July 2010 |
First published: |
June 2010 |
Authors: |
Andreas Bergh
• Magnus Henrekson
|
Dimensions: |
232 x 155 x 8mm (L x W x T) |
Format: |
Paperback
|
Pages: |
84 |
ISBN-13: |
978-0-8447-4353-0 |
Categories: |
Books
|
LSN: |
0-8447-4353-4 |
Barcode: |
9780844743530 |
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