11.10.2023 Introduction to Public Econ.#

2023-10-11_12-21-13

Wagners Law: Governments Size increases not just in absolute terms, but also in relation to overall economy

Explanations:

  • Government = superior goods

  • fiscal illusion

  • Baumol Effect

Baumol Effect: Services = more expensive over time than goods, Government finances many services (education, healthcare)

End of Wagners Law in 1980

  • Neoliberlism

  • Globalization (Race to the Bottom)