Why Does Government Grow?

This paper examines some of the stylised facts in relation to the growth of government in the Western world generally, and Australia in particular. It then reviews some of the main theories advanced to explain long-term growth in the size of government. Existing theory and evidence provide only partial explanations for the stylised facts about growth in government. There are problems in reconciling theories of government growth with theories of government size. Many of the theories of government growth are observationally equivalent, making it difficult to distinguish empirically between different hypotheses.

Dr Stephen Kirchner is a Research Fellow at The Centre for Independent Studies and a Senior Lecturer in Economics at the University of Technology, Sydney Business School. His areas of expertise include monetary and fiscal policy, financial markets, trade and investment, and public choice. Previously, he was an economist with Action Economics, LLC and Director of Economic Research with Standard & Poor’s Institutional Market Services in Sydney and in Singapore. He has also worked as an advisor to members of the Australian House of Representatives and the Senate.


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