Question

Government has increased expenditures to address the Covid Virus situation. It will be interesting to examine the data later to see how fast government expenditure increases for 2020. To answer this question, describe how fast government spending normally grows (say on average 1929 to present) on a per capita basis in real terms. Compare this to the growth rate of real per capita GDP, and comment on whether government is growing faster than the economy or slower.

Answer 1

Government has increased expenditures to address the Covid Virus situation. It will be interesting to examine the data later to see how fast government expenditure increases for 2020. To answer this question, describe how fast government spending normally grows (say on average 1929 to present) on a per capita basis in real terms. Compare this to the growth rate of real per capita GDP, and comment on whether government is growing faster than the economy or slower.

Answer: from 1920 to present there is overall Flunctuction in government expenditure, if we consider government expenditure from historically point of view it has been increasing here in the year 1915-1945 you can see that spending is very much stable but due to 1st and 2nd world War it has been reducing because at that time many countries focus on expenditure only in defense on other things like consumption, production and expenditure there are less spending due to war. World have suffered many pandamic that is for example Ebola, influenza the deadliest, and the covid 19 which we are suffering till now. In 19th century to 21st European countries spending increased they usually spend on social, education, health. If we examine cross countries on per capita basis high income countries spend more on social protection than the low income countries. Like OECD countries they spend more on social spending.

They usually spend for paying wages to their employees, spending on public private partnership. Overall if we look in 1970 government expenditure increase than upto 2000 it increase but in 2010- 18 it decreases. . Today's scenart is that according to WHO we are facing a pandamic caused by SARS-cov-2 which started in December 2019 in Wuhan city in Hubei of China that time epicenter was Wuhan but many countries suffering allot from this pandemic like Italy, USA, India, Pakistan, South Korea all countries now spending more for health benefits they are focusing on providing gloves, ventilator and many more related to health. On per capita basis GDP of all the countries have been slowen down there stock market collapse they have very little spending on production, consumption is also very low. Death rate have been increasing and the GDP growth also become low for most of the countries that are suffering from covid 19 till now.

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