Expansionary effects of the welfare state in a small open economy
AbstractWe examine the relationship between welfare state policies and economic performance in a small open economy with (i) free trade in final goods and international capital mobility, and (ii) aggregate increasing returns to scale. Contrary to the conventional wisdom, we find that a retrenchment of welfare programmes is not an inevitable consequence of economic integration. Instead, by improving the exploitation of aggregate scale economies, social expenditure policies and international openness complement each other in facilitating an improvement in economic performance that can sustain a more generous welfare protection.
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Bibliographic InfoArticle provided by Elsevier in its journal The North American Journal of Economics and Finance.
Volume (Year): 18 (2007)
Issue (Month): 3 (December)
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Web page: http://www.elsevier.com/locate/inca/620163
Other versions of this item:
- Hassan Molana & Catia Montagna, 2005. " Expansionary Effects of the Welfare State in a Small Open Economy," CDMA Conference Paper Series 0505, Centre for Dynamic Macroeconomic Analysis.
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- F1 - International Economics - - Trade
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
- J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
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