Economic growth and the composition of government spending

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.

Keywords

Wagner’s law, Armey-Rahn curve, Scully curve, Laffer curve, productive and non-productive government spending

Received

14.08.2020

Publication date

14.08.2020

Number of characters

39394

Cite

GOST	Kapkanshchikov S. Economic growth and the composition of government spending // Obshchestvo i ekonomika – 2020. – Issue 7 C. 16-31 [Electronic resource]. URL: https://oie.jes.su/S020736760010586-3-1 (circulation date: 22.07.2024). DOI: 10.31857/S020736760010586-3
MLA	Kapkanshchikov, S. "Economic growth and the composition of government spending." Obshchestvo i ekonomika 7 (2020):16-31. DOI: 10.31857/S020736760010586-3
APA	Kapkanshchikov S. (2020). Economic growth and the composition of government spending. Obshchestvo i ekonomika (7), pp.16-31 DOI: 10.31857/S020736760010586-3

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