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The effect of the size and mix of public spending on growth and inequality

Organization for Economic Co-operation and Development, (2016), “The effect of the size and mix of public spending on growth and inequality”, OECD Economics Department, 24 Νοεμβρίου

The size and mix of public spending can have a considerable effect on growth and inequality. For instance, too large governments tend to reduce growth, unless governments function in a highly effective way. On the other hand, large governments tend to redistribute more, thereby reducing inequality. Also the spending components, such as government investment, family benefits or subsidies matter for growth and inequality. Simulations combining both growth and distributional effects illustrate that most reforms can deliver considerable growth gains and benefit the poor.

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