Growth Effects of Government Expenditure and Taxation in Rich Countries. A Reply

Reprint No. 2006:1

Author(s): Stefan Fölster and Magnus HenreksonYear: 2006 Title: European Economic Review Volume (No.): 50 (1) Pages: 219–221

Agell et al. (2005) criticise our earlier findings (Fölster and Henrekson 2001) of a robust negative relationship between government size and economic growth for an extended sample of rich countries. In this short paper it is argued that their critique is unfounded. Most importantly, the critique does not deal with the main result of the original study, namely that the most complete specifications for assessing the relationship between government expenditure and growth in rich countries are robust even according to stringent extreme bounds criteria.

Fölster, Stefan and Magnus Henrekson (2006), "Growth Effects of Government Expenditure and Taxation in Rich Countries. A Reply". European Economic Review 50(1), 219–221.

Magnus Henrekson


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Interdisciplinary European Studies

The European Union and the Return of the Nation State


This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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