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“Governments are bigger than ever. They are also more useless”

Summary:
Says The Economist. The authors argue that falling state capacity, incompetence, corruption, and transfer/entitlement spending, which crowds out public investment and services, are to blame. Update: Related, in VoxEU, Martin Larch and Wouter van der Wielen argue that [g]overnments lamenting a stifling effect of fiscal rules on public investment are often those that have a poor compliance record and, as a result, high debt. They tend to deviate from rules not to increase public investment but to raise other expenditure items.

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Says The Economist. The authors argue that falling state capacity, incompetence, corruption, and transfer/entitlement spending, which crowds out public investment and services, are to blame.

“Governments are bigger than ever. They are also more useless”

Update: Related, in VoxEU, Martin Larch and Wouter van der Wielen argue that

[g]overnments lamenting a stifling effect of fiscal rules on public investment are often those that have a poor compliance record and, as a result, high debt. They tend to deviate from rules not to increase public investment but to raise other expenditure items.

Dirk Niepelt
Dirk Niepelt is Director of the Study Center Gerzensee and Professor at the University of Bern. A research fellow at the Centre for Economic Policy Research (CEPR, London), CESifo (Munich) research network member and member of the macroeconomic committee of the Verein für Socialpolitik, he served on the board of the Swiss Society of Economics and Statistics and was an invited professor at the University of Lausanne as well as a visiting professor at the Institute for International Economic Studies (IIES) at Stockholm University.

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