Abstract
Structurally, all budgets have two sides—a revenue side that deals with the amount of revenue a government collects each year from various sources and an expenditure side that deals with how that revenue is spent on various public goods and services. The amount of money a government spends each year on public goods and related activities ranges from a few million dollars to hundreds of millions and even billions of dollars, depending on the size of the government. Historically, government expenditures have been growing consistently over the years, especially at the federal level, raising some serious concerns in recent years. While the growth trend remains a concern, government expenditures serve a number of vitally important purposes. In addition to dealing the market inefficiencies, such as those discussed earlier, government expenditures are necessary to stabilize the economy, to maintain a strong national defense, to provide public goods, and to deal with specific needs of society such as redistribute income that a free market system will not or cannot address on its own. This chapter provides a broad overview of government expenditures, in particular, the differences between different types of expenditure, the nature of growth in government expenditure, and the causes of this growth. However, government expenditures cannot grow without limits since no economy can sustain an uncontrolled growth and, if not carefully monitored, will have serious economic, social, and political consequences. The chapter concludes with a brief discussion of limits to growth in government expenditure.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Amadeo, K. (2018, August). Current Federal Mandatory Spending. The Balance. https://www.thebalance.com/current-federal-mandatory-spending-3305772.
Amadeo, K. (2019, May). Interest on the National Debt and How It Affects You. The Balance. https://www.thebalance.com/interest-on-the-national-debt-4119024.
Army, R. (1995). The Freedom of Revolution. Washington, DC: Regency Publishing.
Aschauer, D. A. (1989). Is Public Expenditure Productive? Journal of Monetary Economics, 23, 177–200.
Barro, R. (1991). Economic Growth and a Cross-Section of Countries. Quarterly Journal of Economics, 106, 407–441.
Baumol, W. J. (1967, June). Macroeconomics of Unbalanced Growth: The Anatomy of the Urban Crisis. American Economic Review, 57, 415–426.
Bergstrom, T. C., & Goodman, R. D. (1973). Private Demand for Public Goods. American Economic Review, 63(3), 280–296.
Borcherding, T. E., & Deacon, R. T. (1972). The Demand for Services of Non-Federal Governments. American Economic Review, 62(5), 891–901.
Breton, A., & Wintrobe, R. (1975, February). The Equilibrium Size of a Budget-Maximizing Bureau: A Note on Niskanen’s Theory of Bureaucracy. Journal of Political Economy, 83(1), 195–208.
Buchanan, J. M. (1967). Public Finance in Democratic Processes. Chapel-Hill: University of North Carolina Press.
Casas-Pardo, J., & Puchades-Navarro, M. (2001, April). A Critical Comment on Niskanen’s Model. Public Choice, 107(1–2), 147–167.
Dalton, H. (1922). Principles of Public Finance. London, UK: George Routledge.
Elliot, J. (2010). The Future of Social Security. Ameriprise Financial. https://www.ameripriseadvisors.com>top-social-security-questions-answered.
Garrett, T., Kozak, A., & Rhine, R. (2010). Institutions and Government Growth: A Comparison of the 1890s and 1930s. Federal Reserve Bank of St. Louis Review, 92(2), 109–119.
Government Accountability Office (GAO). (1997, May 21). Federal Investment Outlays, Fiscal Years 1981–2002. Washington, DC: GAO/AIMD-97-88.
Gruber, J. (2005). Public Finance and Public Policy. New York, NY: Worth Publishers.
Holcombe, R. G. (2006). Public Sector Economics: The Role of Government in the American Economy. New York, NY: Pearson Prentice-Hall.
Holcombe, R. G. (1989). The Median Voter in Public Choice Theory. Public Choice, 61, 115–125.
Hyman, D. N. (2014). Public Finance: A Contemporary Application of Theory to Policy. New York, NY: Cengage Learning.
Ighodaro, C. A. U., & Oriakhi, D. E. (2010). Does the Relationship Between Government Expenditure and Economic Growth Follow Wagner’s Law in Nigeria? Annals of the University of Petroşani, Economics, 10(2), 185–198.
Joint Economic Committee. (1995, December). The Impact of the Welfare State on the American Economy. Washington, DC: U.S. Congress.
Koop, G., & Poirier, D. J. (1995). An Empirical Investigation of Wagner’s Hypothesis by Using a Model Occurrence Framework. Journal of the Royal Statistical Society Series A: Statistics in Society, 158(1), 123–141.
Landau, D. (1983). Government and Economic Growth in the Less Developed Countries: An Empirical Study for ‘1960–1980’. Economic Development and Cultural Change, 35, 35–75.
Lederle, J. W. (1949). The Hoover Commission Reports on Federal Reorganization. Marquette Law Review, 33(2) (Fall), 89–98.
Maxwell, W. E., Crain, E., & Santos, A. (2012). Texas Politics Today. New York, NY: Thomson-Wadsworth.
Mohammadi, H., Cak, M., & Cak, D. (2008). Wagner’s Hypothesis: New Evidence from Turkey Using the Bounds-Testing Approach. Journal of Economic Studies, 35(1), 94–106.
Mueller, D. C. (2003). Public Choice. Cambridge: Cambridge University Press.
Musgrave, R. A. (1969). Fiscal Systems. New Haven, CT: Yale University Press (Chapter 3).
New, M. J. (2004, October 28). The Gann Limit Turns 25. Cato Institute. https://www.cato.org/publications/commentary/gann-limit-turns-25.
Niskanen, W. A., Jr. (1971). Bureaucracy and Representative Government. New York: Aline, Atherton.
Oates, W. (1972). Fiscal Federalism. New York, NY: Harcourt Brace Jovanovich.
Office of Management and Budget. (2011). Historical Tables: Budget of the US Government. Washington, DC.
Office of Management and Budget. (2018). Historical Tables: Budget of the US Government. Washington, DC.
Office of Management and Budget. (2019). Historical Tables: Budget of the US Government. Washington, DC.
Olson, M. (1965). The Logic of Collective Action: Public Goods and the Theory of Groups. Cambridge, MA: Harvard University Press.
Peacock, A. T., & Wiseman, J. (1961). The Growth of Public Expenditure in the United Kingdom. London: Oxford University Press.
Pechman, J. A., & Mayer, T. (1952, August). Mr. Colin Clark on the Limits of Taxation. The Review of Economics and Statistics, 34(3), 232–242.
Pommerehne, W. W. (1978). Institutional Approaches to Public Expenditure: Empirical Evidence from Swiss Municipalities. Journal of Public Economics, 9(2), 255–280.
Rueben, K. S., & Randall, M. (2017). Tax and Expenditure Limits: How States Restrict Revenues and Spending. Washington, DC: The Urban Institute.
U.S. Bureau of Census. (2005). Projected Population by Single Year of Age, Sex, Race, and Hispanic Origin for the United States: July 1, 2000 to July 1, 2050. Washington, DC.
US Government Defense Spending. (2018). https://www.usgovernmentspending.com/defense_spending.
US Government Spending. (2018, January). https://www.usgovernmentspending.com/us_spending.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2019 The Author(s)
About this chapter
Cite this chapter
Khan, A. (2019). An Overview of Government Expenditures. In: Fundamentals of Public Budgeting and Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-19226-6_3
Download citation
DOI: https://doi.org/10.1007/978-3-030-19226-6_3
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-19225-9
Online ISBN: 978-3-030-19226-6
eBook Packages: Economics and FinanceEconomics and Finance (R0)