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Government Size and Trade Openness: Some Additional Insights

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  • Liberati, Paolo

Abstract

This paper provides additional insights on the relationship between government size and trade openness using a panel of countries drawn from the World Development Indicators and the Penn World Tables 7.0 from 1962 to 2009. It is shown that the compensation hypothesis proposed by Rodrik (1998) and revisited by Alesina and Wacziarg (1998) and by Ram (2009) cannot be attributed general validity. Rather, it may be driven by specific geographical areas.

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File URL: http://mpra.ub.uni-muenchen.de/43561/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 43561.

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Date of creation: 04 Jan 2013
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Handle: RePEc:pra:mprapa:43561

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Keywords: Openness; Compensation hypothesis; Government Consumption; Trade;

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  1. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 106(5), pages 997-1032, October.
  2. Wacziarg, Romain & Alesina, Alberto, 1998. "Openness, Country Size and Government," Scholarly Articles 4553014, Harvard University Department of Economics.
  3. Francesca Gastaldi & Paolo Liberati, 2011. "Economic integration and government size: a review of the empirical literature," Financial Theory and Practice, Institute of Public Finance, Institute of Public Finance, vol. 35(3), pages 327-384.
  4. Ram, Rati, 2009. "Openness, country size, and government size: Additional evidence from a large cross-country panel," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 213-218, February.
  5. Alena Kimakova, 2009. "Government size and openness revisited: the case of financial globalization," Kyklos, Wiley Blackwell, vol. 62(3), pages 394-406, 08.
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