The hypothesis that reductions in taxes reduce future government spending is often cited as a reason for cutting taxes. Despite its prominence in debates over fiscal policy, however, this view has been subject to little investigation. Because taxes change for many reasons, both legislated and unlegislated, examinations of the relationship between overall measures of taxation and subsequent spen...

Spatial patterns in (local) government taxation and spending decisions have received a lot of scholarly attention recently. Still, the focus on taxation or expenditure levels in previous studies is incomplete. In fact, (rational) individuals are likely to consider the level of spending on (or taxation for) public goods provision simultaneously with how much public goods they actually receive – ...

The aim of this paper is to investigate the impact of economic openness on the vertical structure of the public sector within a country. To tackle this issue we set up a simple theoretical model of fiscal federalism, where both central and local public spending enter the objective functions of both a central government and an aggregate local public sector, accommodating a wide range of behaviou...

Health expenditure growth is projected to moderate considerably during 1983-90, reaching $660 billion in 1990 and consuming over 11 percent of the gross national product. During 1973-83, spending for health care more than tripled, increasing from $103 billion to $355 billion and moving from 7.8 percent to 10.8 percent of the gross national product. Government spending for health care is project...

Distributive politics models often predict that legislators will demand inefficiently large projects, with inefficiency increasing in the number of districts, and that this will translate into larger projects and higher spending. The relationship between efficiency and legislature size is often referred to as the ‘‘law of 1/n’’(Weingast, Shepsle, and Johnsen 1981). We demonstrate that the ‘‘law...

Using a rich data set on government spending forecasts, we estimate the effects of unexpected government spending both when the nominal interest rate is near zero lower bound (ZLB) and outside of ZLB period in Japan. The output multiplier is 1.5 on impact in the ZLB period while it is 0.7 outside of the ZLB period. We argue that this result is not driven by the amount of slack in the economy. W...

For the United States economy (1960-1989), the correlation between the growth rates of the Solow residual and the real price of energy (government spending) is -0.55 (0.09). The Solow residual confounds movements in energy prices and government spending with those in true technology. Why? To address this question, this study develops a model to see if it quantitatively captures the endogenous t...

The U.S. federal government allocates resources for the protection of endangered species. Using an ordinary least squares regression, the study analyzes what variables affect the amount of funds an endangered vertebrate receives from the federal government. The results suggest that animal size affects spending decisions. Specifically, larger animals receive more money. Animals designated as hig...

This study analyses government capital and recurrent spending outlays on sectors (education, health, defense agriculture and transport and communication) believed to be critical to the growth of the economy, for the period 1980 to 2014. The Error Correction Method was adopted to analyze the short-run impact of each spending division on the prosperity of the economy. The disaggregation into capi...

We study a fiscal policy model in which the government is present-biased towards public spending. Society chooses a fiscal rule to trade off the benefit of committing the government to not overspend against the benefit of granting it flexibility to react to privately observed shocks to the value of spending. Unlike prior work, we characterize rules that are self-enforcing: the government must p...