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Government shares in total output are characterized by significant variation across countries. I noticed a strong negative correlation between government consumption shares and the price of government services in terms of private consumption. Motivated by this empirical observation, I developed a neoclassical growth model with added government that is capable of matching the variation in government shares very closely using only relative prices. In addition, I provide empirical evidence showing that the relative price of government consumption increases with income, which is consistent with distortions prevailing in poor countries. These two observations combined imply that government shares tend to be higher in poorer countries. [ABSTRACT FROM AUTHOR]

We provide 16 purchasing-power-parity-adjusted estimates of U.K. and U.S. income per capita and output per worker between 1872 and 1990 based on new estimates of their price levels. Our income benchmarks depart from current estimates in four crucial respects. The United States, not the United Kingdom, led in income per capita in the 1870s. The United Kingdom kept pace with the United States through the late Victorian era. Most of the United Kingdom's relative decline occurred between 1905 and 1950. Finally, the post-1950 performance of the U.K. economy was stronger than is now estimated. [ABSTRACT FROM AUTHOR]