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A particularly controversial example of the law of diminishing returns is in the area of state, or public, spending. Some recent studies indicate that diminishing

A particularly controversial example of the law of diminishing returns is in the area of state, or public, spending. Some recent studies indicate that diminishing returns have been very much in evidence in developed countries in recent decades, with returns even being negative in some cases. An example is the IMF paper by Tanzi and Schuknecht, which examined the growth in public spending in industrial economies over the past 125 years and assessed its social and economic benefits.

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