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Does Government Size Affect Per‐Capita Income Growth? A Hierarchical Meta‐Regression Analysis
Author(s) -
Awaworyi Churchill Sefa,
Ugur Mehmet,
Yew Siew Ling
Publication year - 2017
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/1475-4932.12307
Subject(s) - endogeneity , gross domestic product , economics , meta regression , per capita , government (linguistics) , government spending , affect (linguistics) , developing country , econometrics , regression analysis , government revenue , real gross domestic product , meta analysis , demographic economics , macroeconomics , economic growth , statistics , public finance , psychology , demography , population , philosophy , mathematics , linguistics , sociology , communication , medicine , market economy , welfare
Since the late 1970s, the received wisdom has been that government size (measured as the ratio of total government expenditure to gross domestic product ( GDP ) or government consumption to GDP ) is detrimental to economic growth. We conduct a hierarchical meta‐regression analysis of 799 effect‐size estimates reported in 87 primary studies to verify if this assertion is supported by existing evidence. Our findings indicate that the conventional prior belief is supported by evidence mainly from developed countries but not from less developed countries. We argue that the negative relationship between government size and economic growth in developed countries may reflect endogeneity bias.