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The impact of parties, economic growth, and public sector expansion: a comparison of long–term dynamics in the scandinavian and anglo–american democracies
Author(s) -
MIDTBØ TOR
Publication year - 1999
Publication title -
european journal of political research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.267
H-Index - 95
eISSN - 1475-6765
pISSN - 0304-4130
DOI - 10.1111/1475-6765.00447
Subject(s) - economics , public sector , government (linguistics) , affect (linguistics) , government spending , revenue , economic expansion , public spending , government revenue , public expenditure , public finance , macroeconomics , development economics , public economics , economy , political science , market economy , finance , politics , linguistics , philosophy , welfare , law
. This paper discusses (1) the extent to which the partisan composition of government affects economic policies and macroeconomic outcomes, and (2) the interrelationship between public spending, taxation and economic growth. These two issues are connected. Since target variables and instruments affect each other reciprocally, the specification of the partisan model should encompass both a reaction function and an outcome function. A pooled vector autoregressive model suggests that during the last century left–wing governments in the United States, Britain and Canada have reinforced the growth of both public spending and GNP. Only public sector expansion is affected by partisanship in Denmark, Norway and Sweden. In the Anglo–American countries changes in spending occur before changes in economic growth in terms of a lagged crowding out effect. Spending and revenues appear to affect each other reciprocally. By contrast, public sector expansion in Scandinavia stimulates growth, while taxation leads spending.