This paper deals with theoretical explanation of the impact of total government spending on the rate of economic growth. In addition to the theoretical part, a comprehensive overview of empirical research and science articles has been presented in the paper dealing with the impact of the size of the government on growth. The aim of this paper is to determine whether government consumption stimulates economic growth or hinders it, and establishes whether there is an optimal level of government spending in counties where at a certain point rate of government spending maximizes its growth. By reviewing numerous scientific studies and research papers, and based on a regression analysis, it is concluded that in most EU and OECD countries there is an excessive government spending that, through high taxes, slows down the rate of growth. A review of literature has also provided strong theoretical background, as well as studies that confirm the theory, on the existence of a reverse U-curve, the so-called BARS curve showing the quadratic ratio between the size of the government and GDP growth rate. The theoretical basis for the existence of the BARS curve was confirmed by a regression analysis in the example of Finland where it was established that the optimal size of the state is 36.27%, which is considerably less than the present rate of 57%. The methods used in the paper are the method of compilation, descriptive method, deductive method, induction method, comparative method and the regression model of oridinaly least squares.