THE RELATIVE STABILITY OF THE PRIVATE AND THE PUBLIC-SECTOR

This essay examines the relative stability of the private and the public sector of the economy, following three different approaches which at the same time suggest the main conclusions of this article. The first approach is to review the theoretical literature on this issue which does not seem to offer a conclusive answer. The second is a historical and descriptive analysis of the public sector in the main OECD countries in the period 1960-1989, suggesting a sort of cyclical pattern in government behaviour to achieve sustainability. The third approach is a broad econometric analysis to determine whether the macroeconomic time series of the G-10 countries plus Switzerland in 1960-1989 exhibit stability. From this statistical exercise we conclude that there is some weak evidence for the relative stability of the public sector. © 1990 Kluwer Academic Publishers.