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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.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27089.

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Date of creation: 23 Nov 2010
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Handle: RePEc:pra:mprapa:27089

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

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Citations

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Cited by:
  1. Jean-Paul Faguet & Fabio Sánchez, 2009. "Decentralization and Access to Social Services in Colombia," DOCUMENTOS CEDE, UNIVERSIDAD DE LOS ANDES-CEDE 005401, UNIVERSIDAD DE LOS ANDES-CEDE.
  2. Jia, Junxue & Guo, Qingwang & Zhang, Jing, 2014. "Fiscal decentralization and local expenditure policy in China," China Economic Review, Elsevier, Elsevier, vol. 28(C), pages 107-122.
  3. Brehm, Stefan, 2013. "Fiscal Incentives, Public Spending, and Productivity – County-Level Evidence from a Chinese Province," World Development, Elsevier, Elsevier, vol. 46(C), pages 92-103.
  4. Wu, Alfred M. & Wang, Wen, 2013. "Determinants of Expenditure Decentralization: Evidence from China," World Development, Elsevier, Elsevier, vol. 46(C), pages 176-184.
  5. Zhiguo Wang & Liang Ma, 2014. "Fiscal Decentralization in China: A Literature Review," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 51-65, May.
  6. Wang, Zhiguo & Ma, Liang, 2012. "New Development of Fiscal Decentralization in China," MPRA Paper 36918, University Library of Munich, Germany.

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