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Crises And Government: Some Empirical Evidence

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  • Andrew T. Young
  • Jamie Bologna

Abstract

type="main" xml:id="coep12154-abs-0001"> We examine a panel of 70 countries during 1966–2010 and utilize Reinhart and Rogoff crisis dates to estimate the effects of crises on the size and scope of government over both 5-year and 10-year horizons. We also estimate cross-section regressions using 40-year (1970–2010) changes in government variables. In general, the estimated effects of crises on government size/scope are statistically insignificant. We report reasonably robust evidence that inflation and currency crises lead to decreases in the extent of government regulations throughout an economy over a 10-year horizon. Also, over the 40-year period, countries that spent more years in crisis are associated with weaker legal systems and property rights. The size and scope of government appear to be persistent to the extent that even crisis episodes fail to leave a significant mark upon them. A notable exception may be that, over 40-year periods, countries that spend more years in crisis are associated with weaker legal systems and property rights. (JEL E02, O11, O43)

Suggested Citation

  • Andrew T. Young & Jamie Bologna, 2016. "Crises And Government: Some Empirical Evidence," Contemporary Economic Policy, Western Economic Association International, vol. 34(2), pages 234-249, April.
  • Handle: RePEc:bla:coecpo:v:34:y:2016:i:2:p:234-249
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    File URL: http://hdl.handle.net/10.1111/coep.2016.34.issue-2
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    Cited by:

    1. Bjørnskov, Christian, 2016. "Economic freedom and economic crises," European Journal of Political Economy, Elsevier, vol. 45(S), pages 11-23.
    2. Bjørnskov, Christian & Rode, Martin, 2016. "And Yet It Grows: Crisis, Ideology, and Interventionist Policy Ratchets," Working Paper Series 1135, Research Institute of Industrial Economics.
    3. repec:jpe:journl:1416 is not listed on IDEAS
    4. Andersson, Fredrik NG, 2016. "A Blessing in Disguise? Banking Crises and Institutional Change," World Development, Elsevier, vol. 83(C), pages 135-147.
    5. Jamie Bologna & Joshua C. Hall, 2014. "Economic Freedom Research: Some Comments and Suggestions," Working Papers 14-23, Department of Economics, West Virginia University.
    6. repec:eee:jeborg:v:141:y:2017:i:c:p:83-95 is not listed on IDEAS
    7. repec:bla:coecpo:v:35:y:2017:i:2:p:358-372 is not listed on IDEAS

    More about this item

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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