The impact of globalization on the composition of government expenditures: Evidence from panel data
AbstractAccording to the disciplining hypothesis, globalization restrains governments by inducing increased budgetary pressure. As a consequence, governments shift their expenditures in favour of transfers and subsidies and away from capital expenditures. This expenditure shift is potentially enhanced by citizensâ preferences to be compensated for the risks of globalization (âcompensation hypothesisâ). Employing two different datasets and various measures of globalization, we analyze whether globalization has indeed influenced the composition of government expenditures. For a sample of 108 countries, we examine the development of four broad expenditure categories for the period 1970-2001: capital expenditures; expenditures for goods and services; interest payments; and subsidies and other current transfers. A second dataset provides a much more detailed classification: public expenditures, expenditures for defence, order, economic environment, housing, health, recreation, education, and social expenditures. However, this second data set is only available since 1990 â and only for the OECD countries. Our results show that globalization did not influence the composition of government expenditures.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Springer in its journal Public Choice.
Volume (Year): 134 (2008)
Issue (Month): 3 (March)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100332
Globalization; Economic policy; Government expenditure composition; Tax competition; H7; H87; C23;
Other versions of this item:
- Axel Dreher & Jan-Egbert Sturm & Heinrich Ursprung, 2006. "The Impact of Globalization on the Composition of Government Expenditures: Evidence from Panel Data," CESifo Working Paper Series 1755, CESifo Group Munich.
- Axel Dreher & Jan-Egbert Sturm & Heinrich W. Ursprung, 2006. "The impact of globalization on the composition of government expenditures: Evidence from panel data," KOF Working papers 06-141, KOF Swiss Economic Institute, ETH Zurich.
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
- H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Garrett, Geoffrey, 1995. "Capital mobility, trade, and the domestic politics of economic policy," International Organization, Cambridge University Press, vol. 49(04), pages 657-687, September.
- Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
- Philipp Harms & Heinrich W. Ursprung, 2002.
"Do Civil and Political Repression Really Boost Foreign Direct Investments?,"
Western Economic Association International, vol. 40(4), pages 651-663, October.
- Philipp Harms & Heinrich Ursprung, 2001. "Do Civil and Political Repression Really Boost Foreign Direct Investments?," CESifo Working Paper Series 421, CESifo Group Munich.
- Dani Rodrik, 1998.
"Why Do More Open Economies Have Bigger Governments?,"
Journal of Political Economy,
University of Chicago Press, vol. 106(5), pages 997-1032, October.
- Dani Rodrik, 1996. "Why Do More Open Economies Have Bigger Governments?," NBER Working Papers 5537, National Bureau of Economic Research, Inc.
- Rodrik, Dani, 1996. "Why do More Open Economies Have Bigger Governments?," CEPR Discussion Papers 1388, C.E.P.R. Discussion Papers.
- Devereux, Michael P & Griffith, Rachel, 2002.
"Evaluating Tax Policy for Location Decisions,"
CEPR Discussion Papers
3247, C.E.P.R. Discussion Papers.
- Bai, Chong-en & Wei, Shang-Jin, 2001. "The quality of bureaucracy and capital account policies," Policy Research Working Paper Series 2575, The World Bank.
- Lars Siemers & Axel Dreher, 2005.
"The Intriguing Nexus between Corruption and Capital Account Restrictions,"
RWI Discussion Papers
0035, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
- Axel Dreher & Lars-H.R. Siemers, 2003. "The Intriguing Nexus Between Corruption and Capital Account Restrictions," Development and Comp Systems 0306004, EconWPA, revised 07 Apr 2004.
- Axel Dreher & Lars Siemers, 2005. "The Intriguing Nexus between Corruption and Capital Account Restrictions," KOF Working papers 05-113, KOF Swiss Economic Institute, ETH Zurich.
- Axel Dreher & Noel Gaston, 2006.
"Has globalization increased inequality?,"
KOF Working papers
06-140, KOF Swiss Economic Institute, ETH Zurich.
- Axel Dreher, 2006.
"Does globalization affect growth? Evidence from a new index of globalization,"
Taylor and Francis Journals, vol. 38(10), pages 1091-1110.
- Axel Dreher, 2005. "Does Globalization Affect Growth? Evidence from a new Index of Globalization," TWI Research Paper Series 6, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
- Bergh, Andreas, 2006. "Explaining Welfare State Survival: The Role of Economic Freedom and Globalization," Ratio Working Papers 101, The Ratio Institute.
- Michael Lamla, 2007.
"Long-run Determinants of Pollution: A Robustness Analysis,"
KOF Working papers
07-164, KOF Swiss Economic Institute, ETH Zurich.
- Lamla, Michael J., 2009. "Long-run determinants of pollution: A robustness analysis," Ecological Economics, Elsevier, vol. 69(1), pages 135-144, November.
- R Blundell & Steven Bond, .
"Initial conditions and moment restrictions in dynamic panel data model,"
W14&104., Economics Group, Nuffield College, University of Oxford.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- Dooley, Michael P & Isard, Peter, 1980. "Capital Controls, Political Risk, and Deviations from Interest-Rate Parity," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 370-84, April.
- Matthias Busse, 2004. "Transnational Corporations and Repression of Political Rights and Civil Liberties: An Empirical Analysis," Kyklos, Wiley Blackwell, vol. 57(1), pages 45-65, 02.
- Gersbach, Hans & Schmutzler, Armin, 2006.
"The Effects of Globalization on Worker Training,"
IZA Discussion Papers
2403, Institute for the Study of Labor (IZA).
- Bretschger, Lucas & Hettich, Frank, 2000.
"Globalisation, capital mobility and tax competition: Theory and evidence for OECD countries,"
07/2000, Ernst Moritz Arndt University of Greifswald, Faculty of Law and Economics.
- Bretschger, Lucas & Hettich, Frank, 2002. "Globalisation, capital mobility and tax competition: theory and evidence for OECD countries," European Journal of Political Economy, Elsevier, vol. 18(4), pages 695-716, November.
- David Carey & Josette Rabesona, 2002. "Tax Ratios on Labour and Capital Income and on Consumption," OECD Economic Studies, OECD Publishing, vol. 2002(2), pages 129-174.
- Reuven Glick & Michael Hutchison, 2002.
"Capital controls and exchange rate instability in developing economies,"
Pacific Basin Working Paper Series
2000-05, Federal Reserve Bank of San Francisco.
- Glick, Reuven & Hutchison, Michael, 2005. "Capital controls and exchange rate instability in developing economies," Journal of International Money and Finance, Elsevier, vol. 24(3), pages 387-412, April.
- Günther G. Schulze & Heinrich W. Ursprung, 1999. "Globalisation of the Economy and the Nation State," The World Economy, Wiley Blackwell, vol. 22(3), pages 295-352, 05.
- Shang-Jin Wei & Irina Tytell, 2004. "Does Financial Globalization Induce Better Macroeconomic Policies?," IMF Working Papers 04/84, International Monetary Fund.
- Schulze, Gunther G. & Ursprung, Heinrich W. (ed.), 2001. "International Environmental Economics: A Survey of the Issues," OUP Catalogue, Oxford University Press, number 9780198297666.
- Sankar, . Ulaganathan (ed.), 2001. "Environmental Economics," OUP Catalogue, Oxford University Press, number 9780195659139.
- Garrett, Geoffrey, 1998. "Global Markets and National Politics: Collision Course or Virtuous Circle?," International Organization, Cambridge University Press, vol. 52(04), pages 787-824, September.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.