University of Tehran Iranian Economic Review 1026-6542 28 2 2024 07 01 Economics of Nations during Austerity; Does Government Size Matter? 515 535 97722 10.22059/ier.2024.342101.1007438 EN Atta Ul Mustafa International Center for Research in Islamic Economics, Minhaj University Lahore, Punjab 54770, Pakistan 0000-0002-1008-0855 Khurram Shahzad Department of Economics and Finance, Minhaj University Lahore, Punjab 54770, Pakistan 0000-0003-1801-1878 Zunaira Zahoor Center of Economic Planning and Development, Minhaj University Lahore, Punjab 54770, Pakistan 0000-0001-7057-1042 Journal Article 2022 04 01 This study examined the impact of austerity and government size on the economic performance of developed countries. The study was unique in the sense that it incorporates both the austerity and government size on the economic performance of developed countries, and according to Erixon, these two variables need to be taken in the same study to get a better depiction of the economic performance. For this purpose, the study used 20 developed countries. To estimate the data, the fixed effect model is used and the study concluded that both the austerity and government size have a negative association with economic performance. The negative effect of austerity was much more than government size. According to the results, the study suggested that the government might need to stay away from applying austerity measures due to its devastating impact on the economy. https://ier.ut.ac.ir/article_97722_b1638781c398cd63b0117094c6fb44a9.pdf