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Determinants of government size: Evidence from China

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  • Wu, Alfred M.
  • Lin, Mi

Abstract

This paper investigates the determinants of government size at the provincial level in China. We employ the panel data model as a platform for empirical analysis and control for endogeneity in the study. Our study shows that openness to trade and foreign direct investment (FDI) may curtail government expansion, and that the provincial-level public sector is characterized by economies of scale. This study also documents that Wagner’s law does not hold true for China. Moreover, both expenditure decentralization and revenue decentralization contribute to the expansion of China’s government.

Suggested Citation

  • Wu, Alfred M. & Lin, Mi, 2010. "Determinants of government size: Evidence from China," MPRA Paper 27089, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27089
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    More about this item

    Keywords

    Government size - Wagner’s law - Scale effects - Openness to trade - Fiscal decentralization;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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