Noting that the literature has focused on the link between the level of public expenditure and growth, we derive conditions under which a change in the composition of expenditure leads to a higher steady-state growth rate of the economy. The conditions depend not just on the physical...

The authors develop a simple analytical framework that shows how the composition of public spending affects economic growth. Distinguishing between productive and unproductive government spending (that which complements private sector productivity and that which does not), they show that...

The authors develop a simple analytical framework that shows how the composition of public spending affects economic growth. Distinguishing between productive and unproductive government spending (that which complements private sector productivity and that which does not), they show that...

To address the fungibility of foreign aid funds, a proposed new lending instrument - a public expenditure reform loan-would tie an institution's lending strategy to the recipient country's achieving mutually agreed-upon development goals.A foreign aid or foreign lending policy that focuses...