Government size, decentralization and growth: empirical evidence from Italian regions

Liddo, Giuseppe Di; Magazzino, Cosimo; Porcelli, Francesco

doi:10.1080/00036846.2017.1409417

Cited by 11 publications

(8 citation statements)

References 58 publications

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“…Consistent with the results in developed countries, health-care and military expenditures were statistically insignificant. Similar findings where higher government spending promotes economic development in developing countries can be found in Asimakopoulos and Karavias (2016); Kim et al (2018); and Di Liddo et al (2018), and probably suggest the existence of Wagner’s Law.…”

Section: Resultssupporting

confidence: 72%

Do government expenditure reduce income inequality: evidence from developing and developed countries

Sidek

2021

SEF

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Purpose This paper aims to re-examine the impact of government expenditure on income inequality. Existing studies provide mixed results on whether government expenditure reduces or increases income inequality. In this paper, government expenditure is viewed as a tool for redistribution, hence, its impact on inequality is examined. Design/methodology/approach A sample of 122 countries with 91 and 31 countries categorized as developing and developed countries is used. The dynamic panel threshold regression is used to examine the impact of government expenditure on income inequality and to estimate the turning point of the negative or positive effects. Findings The major findings suggest that, in general, government expenditure does reduce income inequality. Results from developed countries support the inversed U-shaped Kuznet curve where higher government expenditure initially led to more inequality but would eventually bring about a positive effect after a certain threshold level. For developing countries, education and development expenditure were the driving forces towards lower income inequality. Practical implications Several policy implications can be derived from this paper. First, government expenditure is a useful tool to alleviate the problem of income inequality. More integration with the global economy via trading activities is also an important channel to help reduce income inequality. Finally, better institutional quality provides an effective ecosystem in promoting better redistribution of income via government expenditure. Originality/value This paper presents a maiden attempt to estimate a threshold value or when government expenditure starts to reduce or increase income inequality. The sample is segregated into developed and developing countries to further control the effect of government size and the level of development of a country.

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Section: Resultssupporting

confidence: 72%

Do government expenditure reduce income inequality: evidence from developing and developed countries

Sidek

2021

SEF

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“…Similarly, studies show that control of corruption eliminates the barriers to economic growth [33], and political stability is imperative in attracting foreign direct investment [48]. Di Liddo et al [23] empirically test the impact of the government's size and its degree of decentralization on the economic growth in Italian regions. They find that for fostering economic growth, the government size should be approximately 32%, while the optimal degree of decentralization can be approximately 52%.…”

Section: Literature Reviewmentioning

confidence: 99%

Hypothesizing directional causality between the governance indicators and economic growth: the case of Afghanistan

Azimi

Shafiq

2020

Futur Bus J

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This paper examines the causal relationship between governance indicators and economic growth in Afghanistan. We use a set of quarterly time series data from 2003Q1 to 2018Q4 to test our hypothesis. Following Toda and Yamamoto’s (J Econom 66(1–2):225–250, 1995. 10.1016/0304-4076(94)01616-8) vector autoregressive model and the modified Wald test, our empirical results show a unidirectional causality between the government effectiveness, rule of law, and the economic growth. Our findings exhibit significant causal relationships running from economic growth to the eradication of corruption, the establishment of the rule of law, quality of regulatory measures, government effectiveness, and political stability. More interestingly, we support the significant multidimensional causality hypothesis among the governance indicators. Overall, our findings not only reveal causality between economic growth and governance indicators, but they also show interdependencies among the governance indicators.

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“…For an analysis of the links between decentralization and economic growth see, for instance, Rodríguez-Pose and Ezcurra (2011). 6 Other studies that have focused on economic growth at the municipality level include De Mello (2002), DiLiddo et al (2018, and Schaltegger and Torgler (2006), among others, although they focus on issues different to quality of government or spending efficiency. 7 These views can be complemented and extended from a more purely public economics perspective, taking into account that, for the full economic potential of cities to be realized, the public goods and services provided by local governments must be done efficiently (Sieg, 2020) and this requires, in a previous stage, to define local governments' functions with detail.…”

mentioning

confidence: 99%

Quality of government and economic growth at the municipal level: Evidence from Spain

Balaguer-Coll

Narbón-Perpiñá

Peiró‐Palomino

et al. 2021

Journal of Regional Science

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This paper analyzes the relationship between government efficiency-an important dimension of quality of government-and economic growth at the municipal level in 1,820 Spanish municipalities during the period 2008-2015. At this level of disaggregation, the literature is virtually nonexistent due to severe data constraints. The efficiency of local government provides an accurate indicator of how good local authorities are in managing their budget. This variable is expected to be highly correlated with other more traditional quality of government indicators, such as corruption. After computing our measure, we then use it in a growth regression framework. We find a dominant positive effect of government efficiency on income per capita growth, which is robust to a wide variety of scenarios. Our findings also suggest that increases in local government quality are particularly rewarding for the poorest municipalities.

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Government size, decentralization and growth: empirical evidence from Italian regions

Cited by 11 publications

References 58 publications

Do government expenditure reduce income inequality: evidence from developing and developed countries

Do government expenditure reduce income inequality: evidence from developing and developed countries

Hypothesizing directional causality between the governance indicators and economic growth: the case of Afghanistan

Quality of government and economic growth at the municipal level: Evidence from Spain

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