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Economic performance, government size, and institutional quality

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Listed author(s):
  • António Afonso

    ()

  • João Jalles

    ()

Abstract

This paper studies the empirical link between government size, institutions and economic activity using a panel of 140 countries over 40 years. Our results, robust under different econometric techniques, show mostly a negative effect of government size on output, while institutional quality has generally a positive impact. Moreover, the detrimental effect of government size on economic activity is stronger the lower institutional quality, and the positive effect of institutional quality on output increases with smaller government sizes. Copyright Springer Science+Business Media New York 2016

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File URL: http://hdl.handle.net/10.1007/s10663-015-9294-2
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Article provided by Springer & Austrian Institute for Economic Research & Austrian Economic Association in its journal Empirica.

Volume (Year): 43 (2016)
Issue (Month): 1 (February)
Pages: 83-109

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Handle: RePEc:kap:empiri:v:43:y:2016:i:1:p:83-109
DOI: 10.1007/s10663-015-9294-2
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Keywords: Production function; Institutions; Globalization; GMM; Pooled mean group; Common correlated effects; C10; C23; H11; H30; O40;

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Find related papers by JEL classification:
  • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
  • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
  • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
  • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
  • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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Cited by:

  1. Castro, Vítor, 2017. "The impact of fiscal consolidations on the functional components of government expenditures," Economic Modelling, Elsevier, vol. 60(C), pages 138-150.

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