DIVERGING TRENDS IN THE SHARES OF NOMINAL AND REAL GOVERNMENT EXPENDITURE IN GDP: IMPLICATIONS FOR POLICY

Publisher Website
Google Scholar
Abstract
This paper reviews the issues underlying the choice of an appropriate government price deflator and the various policy implications that arise in a situation where the growth of the government price deflator exceeds that of the GDP deflator (the so-called Beck phenomenon). It notes the divergence between the real burden of government expenditure, in terms of the taxpayer's opportunity cost, and the real value of publicly produced or purchased goods and services. Empirically, the paper reviews the recent statistical results of Beck and extends the analysis to a sample of developing countries. For the latter, between 1970 and 1975, there has been a noticeable shift away from the adverse relative price effect experienced in the previous decade.

This publication has 0 references indexed in Scilit: