Abstract

Inclusive measures of aggregate transfers, government spending, tax revenue, and tax expenditures are recovered from data on marginal tax rates and other variables using a form of the government budget constraint. Transfers, spending, and tax revenue peaked or were level as percentages of GNP in most OECD countries during 1972-1992. The countries with the greatest peak fiscal sizes had the greatest declines in fiscal sizes from peaks until 1992. Calculations suggest that peaking may have occurred in these countries because governments were larger than could be supported by taxation in long-run equilibrium.