Governments implemented fiscal stimulus packages to alleviate the global financial crisis of 2007–2009. Using annual data from 1996 to 2019, we investigate economic growth in a large sample of countries for pre-and post-Global Financial Crisis years. Our approach analyzes the interaction between institutional quality and government size (government expenditures as share of GDP), reinforced by threshold estimations. We document that economies react to government size depending on the quality of the institutions in question. First, fixed effects models indicate higher institutional quality has positive effects on growth, while government size—and its interactions with institutional quality—has negative effects. Second, the coefficients of government size on economic growth are negative with higher institutional quality and become larger in the post-Global Financial Crisis years. These combined results indicate that higher-quality institutions make economies less tolerant of rising government expenditures than lower-quality institutions. Our main findings support institutional quality as the channel through which fiscal policy has real effects. The evidence herein is robust to measures of institutional quality from different databases.

各国政府实施财政刺激计划以缓解 2007-2009 年的全球金融危机。我们使用 1996 年至 2019 年的年度数据，调查了全球金融危机前后大量国家样本的经济增长情况。我们的方法分析了制度质量和政府规模（政府支出占 GDP 的份额）之间的相互作用，并通过阈值估计得到加强。我们记录了经济对政府规模的反应取决于相关机构的质量。首先，固定效应模型表明，较高的制度质量对经济增长有积极影响，而政府规模及其与制度质量的相互作用则具有负面影响。其次，随着制度质量的提高，政府规模对经济增长的系数为负，并且在后全球金融危机时期变得更大。这些综合结果表明，与质量较低的机构相比，较高质量的机构使经济体对政府支出增加的容忍度更差。我们的主要发现支持制度质量是财政政策产生实际效果的渠道。本文的证据对于来自不同数据库的机构质量衡量是强有力的。