The long run relationship between openness and government size: evidence from bounds test
AbstractThe bounds test is applied to determine the existence of a level relationship between government size, openness, terms of trade volatility, and external risk using time series data from Australia, Canada, England, Norway, Sweden, and the USA. Bounds test results show that the existence of a long run relationship in the USA and Canada, but not in any of the other countries. Long run parameters are estimated using both autoregressive distributed lag and FM-OLS procedures. Results vary from country to country, with some evidence that government size is significantly affected by openness and terms of trade volatility. However, contrary to argument and evidence developed using cross-section data, empirical evidence presented in this paper show that the size of the government has not changed to mitigate the effect of increased income risks associated with greater openness.
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.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 36 (2004)
Issue (Month): 9 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RAEC20
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.:
- Wacziarg, Romain & Alesina, Alberto, 1998.
"Openness, Country Size and Government,"
4553014, Harvard University Department of Economics.
- Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992.
"Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?,"
Journal of Econometrics,
Elsevier, vol. 54(1-3), pages 159-178.
- Denis Kwiatkowski & Peter C.B. Phillips & Peter Schmidt, 1991. "Testing the Null Hypothesis of Stationarity Against the Alternative of a Unit Root: How Sure Are We That Economic Time Series Have a Unit Root?," Cowles Foundation Discussion Papers 979, Cowles Foundation for Research in Economics, Yale University.
- Kwiatkowski, D. & Phillips, P.C.B. & Schmidt, P., 1990. "Testing the Null Hypothesis of Stationarity Against the Alternative of Unit Root : How Sure are we that Economic Time Series have a Unit Root?," Papers 8905, Michigan State - Econometrics and Economic Theory.
- Pesaran, M.H. & Shin, Y., 1995. "An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis," Cambridge Working Papers in Economics 9514, Faculty of Economics, University of Cambridge.
- Bollerslev, Tim & Chou, Ray Y. & Kroner, Kenneth F., 1992. "ARCH modeling in finance : A review of the theory and empirical evidence," Journal of Econometrics, Elsevier, vol. 52(1-2), pages 5-59.
- M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
- Phillips, Peter C B & Hansen, Bruce E, 1990.
"Statistical Inference in Instrumental Variables Regression with I(1) Processes,"
Review of Economic Studies,
Wiley Blackwell, vol. 57(1), pages 99-125, January.
- Tom Doan, . "FM: RATS procedure to estimate cointegrating vectors using Fully Modified Least Squares," Statistical Software Components RTS00069, Boston College Department of Economics.
- Paolo Epifani & Gino Gancia, 2009.
"Openness, Government Size and the Terms of Trade,"
Review of Economic Studies,
Oxford University Press, vol. 76(2), pages 629-668.
- Paolo Epifani & Gino Gancia, 2005. "Openness, government size and the terms of trade," Economics Working Papers 915, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2008.
- Paolo Epifani & Gino Gancia, 2008. "Openness, Government Size and the Terms of Trade," IEW - Working Papers 359, Institute for Empirical Research in Economics - University of Zurich.
- Sáenz Rodríguez, Estela & Sabaté Sort, Marcela & Gadea Rivas, María Dolores, 2009. "La medición del riesgo externo. Un estudio aplicado al caso español en el periodo 1960-2000/The Measurement of External Risk. An Applied Study to the Spanish Case in the Period 1960-2000," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 27, pages 575 (16 PÃ¡, Agosto.
- Liberati, Paolo, 2007. "Trade openness, capital openness and government size," MPRA Paper 44371, University Library of Munich, Germany.
- Ansgar Belke & Thorsten Polleit, 2006.
"Dividend Yields for Forecasting Stock Market Returns. An ARDL Cointegration Analysis for Germany,"
Cyprus Economic Society and University of Cyprus, vol. 9(1), pages 86-116, Summer.
- Ansgar Belke & Thorsten Polleit, 2004. "Dividend Yields for Forecasting Stock Market Returns - An ARDL Cointegration Analysis for Germany," Diskussionspapiere aus dem Institut fÃ¼r Volkswirtschaftslehre der UniversitÃ¤t Hohenheim 244/2004, Department of Economics, University of Hohenheim, Germany.
- Epifani, Paolo & Gancia, Gino A., 2007.
"On Globalization and the Growth of Governments,"
CEPR Discussion Papers
6065, C.E.P.R. Discussion Papers.
- 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.
- Francesca Gastaldi & Paolo Liberati, 2011. "Economic integration and government size: a review of the empirical literature," Financial Theory and Practice, Institute of Public Finance, vol. 35(3), pages 327-384.
- Muhammad Zakaria & Samreen Shakoor, 2011. "Relationship Between Government Size and Trade Openness: Evidence from Pakistan," Transition Studies Review, Springer, vol. 18(2), pages 328-341, December.
- Kueh, Jerome Swee-Hui & Puah, Chin-Hong & Wong, Chiew-Meu, 2008. "Bounds Estimation for Trade Openness and Government Expenditure Nexus of ASEAN-4 Countries," MPRA Paper 12351, University Library of Munich, Germany.
- Ansgar Belke & Thorsten Polleit, 2005.
"Monetary Policy and Dividend Growth in Germany: Long-Run Structural Modelling versus Bounds Testing Approach,"
Diskussionspapiere aus dem Institut fÃ¼r Volkswirtschaftslehre der UniversitÃ¤t Hohenheim
250/2005, Department of Economics, University of Hohenheim, Germany.
- Ansgar Belke & Thorsten Polleit, 2006. "Monetary policy and dividend growth in Germany: long-run structural modelling versus bounds testing approach," Applied Economics, Taylor & Francis Journals, vol. 38(12), pages 1409-1423.
- Benarroch, Michael & Pandey, Manish, 2008. "Trade openness and government size," Economics Letters, Elsevier, vol. 101(3), pages 157-159, December.
- Estela Sáenz & María Dolores Gadea & Marcela Sabaté, 2009. "Measuring the external risk in the United Kingdom," Economics Bulletin, AccessEcon, vol. 29(2), pages 1182-1189.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.