In the 20th century, we were witnesses an unprecedented growth of public expenditure across all the developed countries of the world. With this phenomenon was created a hypothesis about the negative impact of public expenditure on economic growth and in response to it, economists did many studies which tried to verify this negative effect. In the 80ties the first studies which confirmed the negative linear dependence of these two macroeconomic aggregates. It means greater public sector has negative impact to economic growth of countries. In the 90ties the studies which verify the nonlinear dependence of the inverted U-shaped curve with a peak where is the optimal size of public sector. This concept is collectively called "Armey curve" or "BARS curve" and my final thesis deals by this concept and my goal is to introduce BARS concept to Czech readers. It reflects the evolution of public expenditure in the 20th century and describes the theoretical and empirical development of the whole concept until now. It means a hypothesis about the positive benefits of government activities in the economy to a certain point - "optimal point" and the negative after this point. The final thesis also offers custom research on a sample of the Visegrad Four countries in years from 1995 to 2012. The aim of the research is to verify the linear dependence of growth of GDP and the share of public expenditure in GDP and the existence BARS curve and the optimal size of public spending across countries.

<p>While competition among companies tends to be beneficial for the general public, this is not necessarily the case for competition among governments. Key in the fiscal competition theory is that the mobility of firms and households yields incentives for governments to aim to improve their relative position through successive undercutting of tax rates and welfare state arrangements. This mechanism has the potential to work as a disciplining device because it ensures that no jurisdiction is allowed to be grossly inefficient, because if it were grossly inefficient, mobile factors of production would move away. The main concern in the theoretical fiscal competition literature, however, has been that fiscal competition lowers government spending below their efficient levels. Another concern related to fiscal competition is that household mobility is likely to undermine attempts by governments to redistribute income. Empirical evaluation of both the existence and consequences of fiscal competition is the central topic of the thesis “An Empirical Analysis of Decentralization, Fiscal Competition and Welfare Policy”. </p><p>A particular focus of this thesis is on fiscal competition in welfare policy. With decentralized responsibility for the welfare benefit system in Norway, theory predicts that local governments will behave strategically in setting their welfare policy in order to avoid becoming ‘welfare magnets’. The key finding in Chapter 2 of this thesis is that Norwegian local governments in fact engage in such a ‘welfare game’. A local government will respond with reducing their welfare benefits when neighboring local governments reduce their welfare benefits. Encouraged by the finding in Chapter 2, Chapter 3 seeks to answer the question: Does Welfare Policy Affect Residential Choices? The analysis shows that Norwegian welfare recipients respond to changes in welfare policy by migrating. Local politicians concern about being to generous compared to their peers seem warranted. The analysis in Chapter 4 evaluates whether strategic interaction among Norwegian local governments in property tax decisions occurs. With limited mobility of the tax base and politically highly visible decisions, we interpret the strategic interaction found to be driven by yardstick competition, rather than competition for a mobile tax base. The final chapter differs from the rest in that it utilizes data from 18 OECD countries. The essay analyzes the effects of decentralization of government on the size and composition of government spending. Since jurisdictions with limited geographic scope (such as local governments) are, in general, more likely to face greater competitive pressures than larger ones (such as countries), it follows that the more fiscally decentralized countries are expected to experience stronger fiscal competition. One of the key findings is that decentralization of taxing powers is associated with less transfer spending, but unrelated to government consumption.</p> / Paper I reprinted with kind permission of Elsevier, Sciencedirect.com

While competition among companies tends to be beneficial for the general public, this is not necessarily the case for competition among governments. Key in the fiscal competition theory is that the mobility of firms and households yields incentives for governments to aim to improve their relative position through successive undercutting of tax rates and welfare state arrangements. This mechanism has the potential to work as a disciplining device because it ensures that no jurisdiction is allowed to be grossly inefficient, because if it were grossly inefficient, mobile factors of production would move away. The main concern in the theoretical fiscal competition literature, however, has been that fiscal competition lowers government spending below their efficient levels. Another concern related to fiscal competition is that household mobility is likely to undermine attempts by governments to redistribute income. Empirical evaluation of both the existence and consequences of fiscal competition is the central topic of the thesis “An Empirical Analysis of Decentralization, Fiscal Competition and Welfare Policy”. A particular focus of this thesis is on fiscal competition in welfare policy. With decentralized responsibility for the welfare benefit system in Norway, theory predicts that local governments will behave strategically in setting their welfare policy in order to avoid becoming ‘welfare magnets’. The key finding in Chapter 2 of this thesis is that Norwegian local governments in fact engage in such a ‘welfare game’. A local government will respond with reducing their welfare benefits when neighboring local governments reduce their welfare benefits. Encouraged by the finding in Chapter 2, Chapter 3 seeks to answer the question: Does Welfare Policy Affect Residential Choices? The analysis shows that Norwegian welfare recipients respond to changes in welfare policy by migrating. Local politicians concern about being to generous compared to their peers seem warranted. The analysis in Chapter 4 evaluates whether strategic interaction among Norwegian local governments in property tax decisions occurs. With limited mobility of the tax base and politically highly visible decisions, we interpret the strategic interaction found to be driven by yardstick competition, rather than competition for a mobile tax base. The final chapter differs from the rest in that it utilizes data from 18 OECD countries. The essay analyzes the effects of decentralization of government on the size and composition of government spending. Since jurisdictions with limited geographic scope (such as local governments) are, in general, more likely to face greater competitive pressures than larger ones (such as countries), it follows that the more fiscally decentralized countries are expected to experience stronger fiscal competition. One of the key findings is that decentralization of taxing powers is associated with less transfer spending, but unrelated to government consumption. / Paper I reprinted with kind permission of Elsevier, Sciencedirect.com

The thesis deals with the synthesis of Peltzman and Higgs government growth theory and influence of the prevailing Keynesian ideology on predicative ability of these theories. Based on this theoretical synthesis thesis explains the long-term trend of increasing government power in the U.S. which is showed by all measuring methods regarding the size of governmental power. The second part of the thesis discusses the impact of the redistribution of wealth in the household sector to the size of government in the years 1979 - 2009, with an emphasis on recent crisis during 2007 - 2009. Tested hypothesis is that the redistributive processes during the last crisis were aimed mainly to U.S. residents in the area of median income. Based on a comparison of data from the years 1979 - 2009 and relating them to the crisis moment of 2007 - 2009 thesis confirms this hypothesis.

L'objet de ce travail est d'analyser, du XIXe siècle à 2010, les déterminants politico-économiques du niveau des dépenses publiques, exprimé en pourcentage du PIB, pour les quatre principaux pays de l'Union européenne. (la France, l'Allemagne, l'Italie et le Royaume-Uni ; groupe que l'on notera « UE-04 »). Dans le chapitre 1, nous présentons les différentes mesures de la « taille de l'État », et mettons en évidence la croissance des dépenses publiques depuis le début du XIXe siècle. Nous recensons et testons les principaux modèles monofactoriels de détermination du niveau des dépenses publiques : loi de Wagner, modèle de développement de Rostow, effet de déplacement de Peacock et Wiseman, Granger-causalité entre dépenses et recettes, et interactions budgétaires internationales. Ces modèles ne peuvent expliquer que partiellement et superficiellement l'évolution séculaire des dépenses : ils sont trop simples pour appréhender la profonde complexité des processus. Les niveaux de dépenses publiques sont de plus en plus interdépendants, du fait de l'intensification du processus de globalisation. Ils varient de plus en plus de manière similaire : ce co-mouvement (ou cycle international) est probablement lié à l'émergence d'un « fédéralisme budgétaire européen » et à l'amplification de l'intégration. Enfin, ils ne semblent pas converger, du fait de la persistance de fortes et anciennes différences, notamment institutionnelles. Le chapitre 2 propose une première étude systématique des épisodes de baisse des dépenses publiques depuis le XIXe siècle. Après une recension de la littérature, nous procédons à une analyse quantitative. Le nombre d'années de hausse des dépenses est approximativement égal à celui des baisses. En revanche, l'intensité moyenne des hausses est supérieure à celle des baisses. Ces mouvements sont de plus en plus coordonnés entre les économies. La chronique politico-économique atteste que le PIB et les dépenses liées aux guerres constituent des facteurs fondamentaux, et que sur la période contemporaine les configurations institutionnelles et la volonté des dirigeants politiques exercent une influence essentielle. Enfin, les épisodes de baisse durable sont peu nombreux et sont généralement mis en œuvre lorsque la conjoncture économique est favorable, par des réductions opérées dans les trois grandes catégories de dépenses publiques : consommation, investissement et transferts. Dans le chapitre 3, nous effectuons une ample recension de la littérature sur les déterminants des dépenses publiques. Il existe plusieurs dizaines de facteurs potentiels. Les processus de détermination des dépenses publiques étant très complexes, le contenu interprétatif des modèles théoriques est limité. La littérature néglige deux éléments pourtant désormais fondamentaux : les interactions budgétaires entre les pays, et l'influence des institutions de l'Union européenne. Le creusement de la dette et la crise des finances publiques ont conduit à une homogénéisation des gouvernements : les décisions budgétaires sont désormais largement déconnectées du positionnement idéologique des dirigeants ainsi que du niveau de soutien dont ils disposent. Une analyse économétrique en panel des déterminants des catégories de dépenses publiques sur la période 1992-2010 pour l'UE-04 indique que la croissance du PIB agit de manière significativement négative. Les autres variables politico-économiques traditionnelles peinent à expliquer les évolutions des dépenses. Un panel dynamique permet d'apprécier le rôle joué par la variable dépendante retardée. Pour le total des dépenses publiques, il existe une force de rappel, pour laquelle les transferts jouent un rôle prépondérant. / The purpose of this thesis is to analyze, from the 19th century to 2010, the politico-economic determinants of the public expenditures level, expressed in percentage of GDP, of the four major European countries. (France, Germany, Italy, and United Kingdom; group that will be abbreviated "UE-04") In Chapter 1, a presentation of the various measures of the "size of government" is undertaken, and the increase of public expenditures since the 19th century is highlighted. The most important monofactorial models determining public expenditures are reviewed and tested: Wagner's law, Rostow's development model, Peacock and Wiseman's Displacement effect, Granger causality between expenditures and receipts, and international budgetary interactions. These models can only explain partially and superficially the long-term evolution of expenditures: they are too simple to grasp the deep complexity of the determination processes. Public expenditures levels are more and more interdependent, because of the intensification of the globalization process. The levels vary more and more in a similar way: this comovement (or international cycle) is probably linked to the emergence of a "European budgetary federalism" and to the expansion of the integration. Finally, they do not seem to converge, because of the persistence of strong and old differences, especially institutional ones. Chapter 2 is a first systematic analysis of the episodes of the public expenditures' reduction from the 19th century. The literature is reviewed, and a quantitative analysis is carried out. The number of years of increase is approximately equal to the number of years of reduction. Nonetheless, the average intensity of increases is greater than the average intensity of reductions. These movements are more and more coordinated across economies. The politico-economic chronicles establishes that GDP and war-related expenditures are fundamental factors, and that in the contemporary period the institutional configurations and the will of the political leaders exert a major influence. Finally, there are few episodes of sustainable reduction. They are generally implemented when the overall economic situation is favorable, and cuts are then employed in the three major categories of public expenditures: consumption, investment, and transfers. In Chapter 3, the abundant literature related to the determinants of public expenditures is reviewed. There are several dozens of potential factors. The determination process of the public expenditures is very complex, and thus the interpretive content of theoretical models is rather limited. The literature disregards two elements that are henceforth fundamental: the budgetary interactions between countries, and the influence of the institutions of the European Union. The growing public debt and the public finance crisis have led to a homogenization of governments: budgetary decisions are henceforth largely unrelated to the ideological orientation of political leaders, as well as to the level of popularity that these leaders enjoy. An econometric analysis of panel data is performed to study the determinants of the main categories of public expenditures on the period 1992-2010 for the UE-04. GDP growth's impact is significantly negative. The other traditional politico-economic variables barely explain the evolution of public expenditures. The role played by the lagged dependent variable is estimated using a dynamic panel. There is a restoring force for the total of public expenditures, for which the transfers play a paramount role.

<p>Diss. Stockholm : Handelshögskolan, 2008 Sammanfattning jämte 5 uppsatser</p>

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