Trade openness, capital openness and government size
AbstractThis paper provides empirical evidence of the relation between trade openness, capital openness and government expenditures in a cross sectional time-series context. It is shown that capital openness is significantly and negatively related to government expenditures in line with the conventional wisdom that capital mobility may undermine the ability of governments to maintain larger public sectors. More importantly, the compensation hypothesis originally proposed by Rodrik (1998) and traceable back to Cameron (1978) is not in general supported by the data.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 44371.
Date of creation: 2007
Date of revision:
Publication status: Published in Journal of Public Policy 27.2(2007): pp. 215-247
Government Size; Openness; Compensation hypothesis;
Find related papers by JEL classification:
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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