Economics Explored

Government spending and economic growth with Dr Dan Mitchell

Episode Summary

How does the size of government affect the vitality of economies? Is there an optimal size of government? To help us answer these questions, we’re joined this episode by Dr Dan Mitchell, an internationally renowned public finance expert and commentator, co-founder of the Center for Freedom and Prosperity, and a former Senior Fellow at the Cato Institute.

Episode Notes

Here’s a link to Dr Dan Mitchell’s International Liberty blog. 

Use these timestamps to jump right to the highlights:

• 1:40 – Gene mentions the Optimal size of government in Australia paper co-authored by Griffith University Professor Tony Makin and Economic Society of Australia (QLD) President Julian Pearce
• 3:00 – Dan notes empirical literature suggests optimal size of government around 20% of GDP
• 10:20 – discussion of OECD research on government spending and growth (see this OECD working paper and Dan’s blog plot)
• 17:10 – Dan notes the 1930s and 1960s were the two periods where the size of government really stepped up
• 20:05 – how a value-added tax (VAT) promotes growth of government
• 30:55 – discussion of Adam Smith’s dictum “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and tolerable administration of justice…” (see this Online Library of Liberty post)
• 32:45 – using foreign judges to import the rule of law