“ Hidden Risks from Expanding Governments ”

 The swell in government spending threatens to diminish long term growth potential in many nations. Our study of 37 countries reveals how enlarged government spending meaningfully dents the efficiency of investment and potential for future growth.  In response to the financial crisis, Greece, the UK, and Spain implemented the loosest fiscal policies during the 2008-2010 period, among 37 nations evaluated. The US and Portugal are not far behind. Despite the focus on China's fiscal stimulus, the expansion was reasonably contained representing only 5.4% of GDP during the identified period and substantially less than 24.2% in the US.  Government spending and deficits represent a meaningful threat to international financial stability especially with mounting nervousness surrounding enlarged sovereign debt levels and transfer of the financial crisis from the private to public sector.