The impact of government spending onto the overall economy is a highly debated topic, with some arguing the advantages, whilst others pointing out the limitations. A most relevant example of positive effects is given by the recent implementation of the Troubled Asset Relief Program, which has had the benefit of salvaging numerous American icons. Nonetheless, this situation was an extraordinary one and other specialists argue that in times of normal economic state, the impacts of government spending are among the most negative ones on the long run. Some of these harmful effects refer to increased costs and poor quality of public services, an inefficient allocation of resources, lack of motivation and innovation and so on. The pivotal role of government spending is then that of ensuring peace and stability and creating a climate that fosters economic growth. The actual involvement should however be minimal.

References:

Garfield, R., Government Spending and...
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