The Size of Government and U.S.-European Differences in Economic Performance

Author/Editor:

Gerwin Bell ; Norikazu Tawara

Publication Date:

April 1, 2009

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

An influential strand of recent research has claimed that large governments in European countries explain their weaker long-term economic performance compared to the U.S. On the other hand, despite these alleged costs, large governments have been popular with electorates. This paper seeks to shed light on this apparent inconsistency; it confirms an adverse effect of taxes on labor supply, but also finds evidence of efficiency-increasing government intervention. However, and especially in the core "Rhineland-model" European countries, actual government policies often depart from such efficient interventions, pointing to the possibility that voters prefer redistribution even at the cost of allocational efficiency.

Series:

Working Paper No. 09/92

Subject:

Frequency:

Monthly

English

Publication Date:

April 1, 2009

ISBN/ISSN:

9781451872392/1018-5941

Stock No:

WPIEA2009092

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

51

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