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Elasticity of Substitution, Capital Inflow and Government Size

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  • Sajid Anwar

    (University of Adelaide)

Abstract

A number of recent studies have attempted to identify the determinants of government size. It is well known that the size of government has implications for welfare and economic growth. This paper shows that the size of the fixed cost involving public good provision affects the magnitude of capital inflow induced changes in government size and welfare. By making use of a simulation exercise, it is argued that capital inflow can decrease (increase) the size of government and welfare if the elasticity of substitution is sufficiently large (small).

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Bibliographic Info

Article provided by Society for AEF in its journal Annals of Economics and Finance.

Volume (Year): 7 (2006)
Issue (Month): 1 (May)
Pages: 145-156

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Handle: RePEc:cuf:journl:y:2006:v:7:i:1:p:145-156

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Related research

Keywords: Producer Services; Public Goods; Capital Inflow; Elasticity of Substitution;

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  1. Anwar, Sajid, 2005. "Specialisation-based external economies, supply of primary factors and government size," Journal of Economics and Business, Elsevier, Elsevier, vol. 57(3), pages 259-271.
  2. Dar, Atul A. & AmirKhalkhali, Sal, 2002. "Government size, factor accumulation, and economic growth: evidence from OECD countries," Journal of Policy Modeling, Elsevier, Elsevier, vol. 24(7-8), pages 679-692, November.
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