Arbeitspapier

Legitimacy and the Cost of Government

While previous research documents a negative relationship between government size and economic growth, suggesting an economic cost of big government, a given government size generally affects growth differently in different countries. As a possible explanation of this differential effect, we explore whether perceived government legitimacy (measured by satisfaction with the way democracy works) influences how a certain government size affects growth. On the positive side, a legitimate government may “get away” with being big since legitimacy can affect people's behavioral response to, and therefore the economic growth cost of, taxation and government expenditures. On the negative side, legitimacy may make voters less prone to acquire information, which in turn facilitates interest-group oriented or populist policies that harm growth. A panel-data analysis of up to 30 developed countries, in which two different measures of the size of government are interacted with government legitimacy, reveals that legitimacy exacerbates a negative growth effect of government size in the long run. This could be interpreted as governments taking advantage of legitimacy in order to secure short-term support at a long-term cost to the economy.

Sprache
Englisch

Erschienen in
Series: IFN Working Paper ; No. 1045

Klassifikation
Wirtschaft
Fiscal Policy
Structure, Scope, and Performance of Government
Taxation, Subsidies, and Revenue: General
Institutions and Growth
Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
Thema
Legitimacy
Economic growth
Size of government
Confidence
Trust

Ereignis
Geistige Schöpfung
(wer)
Berggren, Niclas
Bjørnskov, Christian
Lipka, David
Ereignis
Veröffentlichung
(wer)
Research Institute of Industrial Economics (IFN)
(wo)
Stockholm
(wann)
2014

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Berggren, Niclas
  • Bjørnskov, Christian
  • Lipka, David
  • Research Institute of Industrial Economics (IFN)

Entstanden

  • 2014

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