Growth of Government Spending

1
Growth of Government Spending
2
Theory

• Wagner
• centralization of government functions
• luxury goods (income elasticity gt1)
• market failure
• Peacock-Wiseman
• stepwise

3

• Niskanen
• bureau growth
• Musgrave and Rostow
• development stages requires government
  (infrastructure)
• Borcherding
• taxation dispersed through population - benefits
  focused

4
Data

• 1935-39 dollars
• 1867 - 18 million
• 1980 - 9 billion
• Current dollars
• 1980 - 60.8 billion
• 2004 - 175.9 billion
• GDP
• 1980 - 546.4 billion
• 2004 - 1,008.0 billion

5

• Spending as GDP
• 1980 - 11.1
• 2004 - 17.4