Abstract

We develop in this paper an augmented version of the Solow (1956) [Solow R., 1956. A contribution to the theory of economic growth. Quarterly Journal of Economics 70, 65–94] growth model, including the role of government. The model leads to a non-monotonic relationship between the rate of growth of per capita output and government size, generalizing previous results by Barro (1990) [Barro R., 1990. Government spending in a simple model of endogenous growth. Journal of Political Economy 98, S103–S125] to the case in which returns to scale to private factors are not constant.

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