The Growth of Government Expenditure : A Review of Quantitative Analysis

This paper reviews the extensive empirical literature on the growth and determinants of government expenditure. Although the coverage does not aim to be exhaustive, the authors provide an overview of the quantitative approaches to analyzing the growth in government expenditure. The main debates in the literature are described, and the authors present a few tests of some theories and describe one or two of their own experiments in others. The paper highlights the data problems and the technical difficulties of hypothesis testing and model estimation in this area, many arising from the nature of the problem studied. It is contended that the quantitative analysis of government expenditure growth has often improved the formulation of hypotheses, but that data and theoretical limitations have meant that the methods employed have not always been justified.