Efficient government size: France in the 20th century

- We find a nonlinear co-integration relationship between government size and real GDP.
- We use historical time-series data on France in the 20th century.
- The efficient government size was reached when public spending was 30% of GDP.

The benefits and costs of government suggest an efficient government size. We investigate efficient government size by analyzing the relation between public spending and real GDP for France in the period 1896-2008. The results show a co-integration nonlinear relationship. Our time-series data on France represents one of the longest periods studied in literature. Our empirical findings suggest that efficient government size measured by public spending was reached when public spending was around 30% of GDP. Conclusions point to particularities of countries that suggest efficient government size is specific to different countries.