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:: Volume 5, Issue 19 (quarterly journal of Fiscal and Economic Policies 2017) ::
3 2017, 5(19): 237-261 Back to browse issues page
The Impact of the Government Size on Economic Growth in the Selected OPEC Countries: A Threshold Analysis
Abstract:   (36 Views)

This paper examines the relationship between the government size and economic growth and determines the optimal level of government size in OPEC countries over 1960-2015. In this regards, we use a large dataset in a non-linear panel Generalized Method of Moments framework. We show that this relationship is statistically significant above and below the optimal level. In this study, the government expenditure (percentage of GDP) is defined as an index for the government size. According to the findings, the threshold level of optimal government size is 19 percent for the countries. The results show that the government size has a positive impact on economic growth in the first regime, while in the second regime, this is negative. In other words, the results confirm the Army curve hypothesis. On the other hand, the average size of government among all the countries is 24.7 percent, which represents government spending is putting on the slopes of diminishing returns. Therefore, the government size should be reduced to achieve their optimal amount.
 

Keywords: Government size, Economic growth, Dynamic threshold estimation, Army curve, Selected OPEC Members Countries
Full-Text [PDF 1086 kb]   (25 Downloads)    
Type of Study: Research | Subject: Special
Received: 2017/02/15 | Accepted: 2017/08/24 | Published: 2017/12/4
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The Impact of the Government Size on Economic Growth in the Selected OPEC Countries: A Threshold Analysis . 3. 2017; 5 (19) :237-261
URL: http://qjfep.ir/article-1-611-en.html
Volume 5, Issue 19 (quarterly journal of Fiscal and Economic Policies 2017) Back to browse issues page
فصلنامه سیاستهای مالی و اقتصادی Quarterly Journal of Fiscal and Economic Policies
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