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Government Consumption Volatility and the Size of Nations

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  • Davide Furceri
  • Marcos Poplawski Ribeiro

Abstract

The aim of this paper is to analyze the relation between the volatility of government consumption and country size. Using a sample of 160 countries from 1960 to 2000 the main findings of our empirical analysis suggest that: 1) smaller countries have more volatile non-discretionary and discretionary government consumption, and also a more volatile government size; 2) the relation between government spending volatility and the size of a country is more negative for more volatile economies; 3) the relation between government consumption volatility and country size is more negative for functions of government spending that are characterized by a high level on non-rivality. The results are robust to different time and country samples, different econometric techniques and to several sets of control variables. La volatilité de la consommation du gouvernement et la taille du pays L'objectif de ce papier est d'analyser la relation existant entre la volatilité de la consommation du gouvernement et la taille du pays. Utilisant un échantillon de 160 pays de 1960 à 2000, les principaux résultats de notre analyse suggèrent que : 1) Les petits pays ont une consommation du gouvernement discrétionnaire et non-discrétionnaire plus volatile, de même qu'une taille de gouvernement plus volatile; 2) La relation entre la volatilité des dépenses du gouvernement et la taille du pays est plus négative pour les économies les plus volatiles; 3) La relation entre la volatilité de la consommation du gouvernement et la taille du pays est plus négative for les catégories de dépense publiques qui sont caractérisées par un haut niveau de non-rivalité. Les résultats sont robustes à des changements de période et d'échantillons de pays, à l'utilisation de différentes techniques économétriques et au choix de différentes variables de contrôle.

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File URL: http://dx.doi.org/10.1787/225543847282
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 687.

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Date of creation: 20 Mar 2009
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Handle: RePEc:oec:ecoaaa:687-en

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Related research

Keywords: country size; fiscal policy; fiscal volatility; government size; taille du gouvernement; politique budgétaire; taille du pays; volatilité budgétaire;

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Cited by:
  1. Lledó, Victor & Poplawski-Ribeiro, Marcos, 2013. "Fiscal Policy Implementation in Sub-Saharan Africa," World Development, Elsevier, vol. 46(C), pages 79-91.
  2. Sacchi, Agnese & Salotti, Simone, 2014. "The impact of national fiscal rules on the stabilisation function of fiscal policy," MPRA Paper 56982, University Library of Munich, Germany.
  3. Furceri, Davide & Sacchi, Agnese & Salotti, Simone, 2014. "Can fiscal decentralization alleviate government consumption volatility?," MPRA Paper 54513, University Library of Munich, Germany.
  4. Agnese Sacchi & Simone Salotti, 2014. "The influence of decentralized taxes and intergovernmental grants on local spending volatility," Working Papers 1405, Universidade de Vigo, GEN - Governance and Economics research Network.

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