THE EXPANDING PUBLIC SECTOR: SOME CONTRARY EVIDENCE

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Abstract
In real terms government's share of gross domestic product declined between 1950 and 1970 in a majority of thirteen developed countries studied. Elasticity coefficients below unity were obtained for nine of the thirteen countries, at the level of government consumption (resource-absorbing expenditure); and for eight of the thirteen, at the level of total current expenditure, including transfer payments. In every country examined the price (cost) index of government sendees rose by a greater margin than the price index for GDP. Allowing for data inadequacies, the study suggests that real size of the public sector may have peaked in many mature economies.

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