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Openness, country size, and government size: Additional evidence from a large cross-country panel

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  • Ram, Rati
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    Abstract

    A body of influential research has suggested that there is a negative association between country size and government size and between country size and openness, and these may account for the positive association between openness and government size. Estimation of several models from 41-year panel data for over 150 countries indicates that while pooled OLS estimates support the foregoing scenario, when cross-country heterogeneity is taken into consideration through the fixed-effects format, there is little evidence of a negative association of country size with either government size or openness. Therefore, it does not seem likely that positive association between openness and government size arises due to the mediating role of country size.

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    File URL: http://www.sciencedirect.com/science/article/B6V76-4S9P5M9-2/2/5f1a6ead872af0e1d60bdf7e28a770bb
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Public Economics.

    Volume (Year): 93 (2009)
    Issue (Month): 1-2 (February)
    Pages: 213-218

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    Handle: RePEc:eee:pubeco:v:93:y:2009:i:1-2:p:213-218

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    Web page: http://www.elsevier.com/locate/inca/505578

    Related research

    Keywords: Openness Government size Country size;

    References

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    1. Rodrik, Dani, 1996. "Why do More Open Economies Have Bigger Governments?," CEPR Discussion Papers 1388, C.E.P.R. Discussion Papers.
    2. World Bank, 2007. "World Development Indicators 2007," World Bank Publications, The World Bank, number 8150, October.
    3. Alesina, Alberto & Wacziarg, Romain, 1998. "Openness, country size and government," Journal of Public Economics, Elsevier, vol. 69(3), pages 305-321, September.
    4. Biehl, Dieter, 1998. "Wagner's Law: An Introduction to and a Translation of the Last Version of Adolph Wagner's text of 1911," Public Finance = Finances publiques, , vol. 53(1), pages 102-11.
    5. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
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    Cited by:
    1. Mª Dolores Gadea Rivas & Marcela Sabaté Sort & Estela Sáenz Rodríguez, 2009. "The relationship between trade openness and public expenditure. The spanish case, 1960-2000," Documentos de Trabajo dt2009-06, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    2. Durevall, Dick & Henrekson, Magnus, 2011. "The futile quest for a grand explanation of long-run government expenditure," Journal of Public Economics, Elsevier, vol. 95(7), pages 708-722.
    3. Erauskin, Iñaki, 2013. "The impact of financial openness on the size of utility-enhancing government," Economics Discussion Papers 2013-7, Kiel Institute for the World Economy.
    4. Hallak, Issam, 2013. "Private sector share of external debt and financial stability: Evidence from bank loans," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 17-41.
    5. Escobari Diego & Mollick André Varella, 2013. "Output growth and unexpected government expenditures," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 33, September.
    6. Alfred Wu & Mi Lin, 2012. "Determinants of government size: evidence from China," Public Choice, Springer, vol. 151(1), pages 255-270, April.
    7. Thushyanthan Baskaran & Zohal Hessami, 2011. "A Tale of Five PIIGS: Soft Budget Constraints and the EMU Sovereign Debt Crises," Working Paper Series of the Department of Economics, University of Konstanz 2011-45, Department of Economics, University of Konstanz.
    8. Liberati, Paolo, 2013. "Government Size and Trade Openness: Some Additional Insights," MPRA Paper 43561, University Library of Munich, Germany.
    9. Michael Devereux & Simon Loretz, 2012. "What do we know about corporate tax competition?," Working Papers 1229, Oxford University Centre for Business Taxation.
    10. Benarroch, Michael & Pandey, Manish, 2012. "The relationship between trade openness and government size: Does disaggregating government expenditure matter?," Journal of Macroeconomics, Elsevier, vol. 34(1), pages 239-252.
    11. Estela Sáenz & Marcela Sabaté & M. Gadea, 2013. "Trade openness and public expenditure. The Spanish case, 1960–2000," Public Choice, Springer, vol. 154(3), pages 173-195, March.

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