Secular cost changes and the size of government. Towards a generalized theory
Journal of Public Economics , Volume 45 - Issue 3 p. 363- 381
Baumol's 'cost disease' account of government growth is contrasted with that of Kau and Rubin who focus on decreasing costs of tax collection over time. The apparent paradox wherein the first theory explains government growth by cost increases and the second by way of cost decreases is technically resolved. Why both theories seem to be able to stand up to empirical tests even though they use similar data is then explained. Finally, public choice analysis is employed to reveal further potential for the ultimate construction of one all-embracing secular cost change theory of government growth.