Rob Arnott finds a ‘sweet spot’ for public spending
Veteran buy-sider sees an investing case for small government
What type of governments should investors prefer? According to Rob Arnott, the broad answer is, ones that do less.
Arnott, the founder of $147 billion investment adviser, Research Affiliates, set out with colleagues to determine how public spending affects economic growth – and to establish what an optimal amount of spending might be.
“I think there is a sweet spot for spending, around 15% to 25% of GDP,”
Arnott concluded. “Above that, you’re eroding future growth.” Below it, growth is likely to
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