Government Transfers and Growth: Is there Evidence of Genuine Effect?

This paper investigates how government transfers affect economic growth. Using meta-analysis techniques, we systematically review 24 primary studies with 164 estimates that examine the effect of government transfers on economic growth. After addressing heterogeneity and issues of publication bias in the existing literature, we find a negative association between government transfers and growth. This negative growth impact of government transfers also holds for developed countries. Meta-regression results also reveal that the effect size of reported estimates largely depends on individual study characteristics. In particular, data time period, measure of government transfers, econometric specification and underlying theoretical models are important factors that explain the variations in the empirical results.