Chapter 10 - The Growth of Public Expenditure in France

Abstract

Publisher Summary In France, as in most other industrialized countries, the growth of the public sector has become a strategic issue in the economic and political debate alongside traditional variables such as inflation and unemployment. This results from an almost continuous rise in the tax burden and the public sector share in the national product. This chapter provides an overview of the trends in public expenditure in France during the period 1961–1983. It discusses the changes in the following main characteristic ratios that highlights the behavior of the public sector in France since 1961: (1) the general government expenditure (GG) as a percentage of GDP ( Y ), and (2) the composition of general government spending by types of expenditure, consumption (GC), investment (GI), and transfers (GTR), and by sectors, central government (CG), local government (LG), and social security funds (SG). It also discusses the theoretical foundations of the estimated equations. These policy functions are based upon an extension of the median voter model. The functions try to go beyond the traditional approach proposed by Borcherding and try to explore the Borcherding's residual. The chapter presents the empirical analysis. It presents a justification of the choice of the dependent variables, rates of growth of nominal public expenditure, disaggregated by sectors and types, and the results. It also presents an analysis of the results, and reviews their significance and their explanatory power.