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Elasticity of Substitution, Capital Inflow and Government Size

Author

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  • Sajid Anwar

    (University of Adelaide)

Abstract

A number of recent studies have attempted to identify the determinants of government size. It is well known that the size of government has implications for welfare and economic growth. This paper shows that the size of the fixed cost involving public good provision affects the magnitude of capital inflow induced changes in government size and welfare. By making use of a simulation exercise, it is argued that capital inflow can decrease (increase) the size of government and welfare if the elasticity of substitution is sufficiently large (small).

Suggested Citation

  • Sajid Anwar, 2006. "Elasticity of Substitution, Capital Inflow and Government Size," Annals of Economics and Finance, Society for AEF, vol. 7(1), pages 145-156, May.
  • Handle: RePEc:cuf:journl:y:2006:v:7:i:1:p:145-156
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    References listed on IDEAS

    as
    1. Anwar, Sajid, 2005. "Specialisation-based external economies, supply of primary factors and government size," Journal of Economics and Business, Elsevier, vol. 57(3), pages 259-271.
    2. Dar, Atul A. & AmirKhalkhali, Sal, 2002. "Government size, factor accumulation, and economic growth: evidence from OECD countries," Journal of Policy Modeling, Elsevier, vol. 24(7-8), pages 679-692, November.
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    More about this item

    Keywords

    Producer Services; Public Goods; Capital Inflow; Elasticity of Substitution;

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • H19 - Public Economics - - Structure and Scope of Government - - - Other
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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