CHAPTER 1 WHY STUDY PUBLIC FINANCE?

11

FIGURE 1-1
% of
GDP

50%

40

30

20

10

1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Federal Government Spending as a Percent of GDP, 19302008 From 1930 to

2008, federal government spending as a share of GDP has grown from less than 3% to
21%. The huge spike in spending over the 19411945 period was due to the massive
increase in defense expenditures during World War II.
Source: Office of Management and Budget (2008a), Table 1.2.

FIGURE 1-2

% of
GDP
70%

60
Sweden
OECD average
50

40

30

United States
20

Greece
10

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Total Government Spending Across Developed Nations, 19602008 Government

spending as a share of GDP has grown throughout the developed world, but the pace of growth
has varied. The United States has seen a modest growth in its government share over this period,
while government spending in Greece has more than tripled as a share of the economy.
Source: Organization for Economic Cooperation and Development (2008b). Annex Table 30.