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Guest lecture

Long-run Growth and the Composition of Government Spending and Taxes

Event series: 

Professor Norman Gemmell

University of Nottingham

Norman Gemmell is Professorial Research Fellow in the School of Economics, University of Nottingham, having previously been Reader (1990-96) and Professor (1996-99) of Development Economics. His main research interests are in the fields of economic development, especially public finance in developing countries; economic growth, where his work has focussed on the impact of education, public expenditure, taxation and debt on economic growth; and public finance/public choice - modelling demands for public expenditure, tax revenue responsiveness and redistribution.


This lecture will review and evaluate the recent literature on the long-run impacts of fiscal policy on growth at the macro level. It will focus on a number of key recent developments in the theoretical and empirical literatures. These issues are pursued empirically for a sample of OECD countries, examining the robustness of previous ‘long-run’ results to new empirical methods. The evidence suggests:

  • the composition of taxes and expenditures is crucial;
  • false conclusions are likely to be drawn from evidence that ignores the government budget constraint;
  • there are strong long-run similarities, but short-run differences, across OECD countries;
  • long-run’ growth effects of fiscal policy are typically achieved within a few years.

The most appropriate interpretation of the evidence would appear to be that fiscal policy effects on growth are short-run and significant, and these are also persistent, provided the initial fiscal policy changes are not reversed.

Last updated: 
Monday, 15 October 2007