Economic growth and the composition of government spending

 
PIIS020736760010586-3-1
DOI10.31857/S020736760010586-3
Publication type Article
Status Published
Authors
Occupation: Head of the Department of Economics of Ulyanovsk State University
Affiliation: Ulyanovsk State University
Address: Russian Federation
Journal nameObshchestvo i ekonomika
EditionIssue 7
Pages16-31
Abstract

The article uncovers a direct and an inverse relationship between government spending and economic growth. The direct relationship is explained by Wagner’s law, while the inverse one is outlined using the Armey-Rahn curve. The author argues that a slowdown of the economic growth is inevitable when a share of government spending in GDP shifts from the normal to the off-limits area of this curve. Outlining the patterns of the privatization cycles of the global economy the author defends the thesis that a composition of the government spending is a decisive factor determining such patterns. In times of recession, finding the optimal point on the Scully curve specific to Russia’s economy could be helped not by cutting the spending but, on the contrary, by the expansion of the government spending, conditional on the optimization of its components.

KeywordsWagner’s law, Armey-Rahn curve, Scully curve, Laffer curve, productive and non-productive government spending
Received14.08.2020
Publication date14.08.2020
Number of characters39394
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