ECB paper says government spending harms growth
A working paper published yesterday by the European Central Bank (ECB) analyses the effects of government spending and revenue on long-term growth.
The paper - Fiscal Composition and Long-term Growth, by António Afonso and João Jalles - studies 155 developed and developing countries between 1970 and 2008.
It finds that revenues have "no significant impact" on growth, although income taxes are usually detrimental to growth. By contrast, government spending has a "highly significant" negative
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