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Determinants of government size: evidence from China

  • Alfred Wu

    ()

  • Mi Lin

    ()

This paper investigates the determinants of government size at the provincial level in China. We employ the panel data model as a platform for empirical analysis and control for endogeneity in the study. Our study shows that openness to trade and foreign direct investment (FDI) may curtail government expansion, and that the provincial-level public sector is characterized by economies of scale. This study also documents that Wagner’s law does not hold true for China. Moreover, both expenditure decentralization and revenue decentralization contribute to the expansion of China’s government.

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File URL: http://hdl.handle.net/10.1007/s11127-010-9746-y
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Article provided by Springer in its journal Public Choice.

Volume (Year): 151 (2012)
Issue (Month): 1 (April)
Pages: 255-270

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Handle: RePEc:kap:pubcho:v:151:y:2012:i:1:p:255-270
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100332

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  1. Marlow, Michael L, 1991. " Privatization and Government Size," Public Choice, Springer, vol. 68(1-3), pages 273-76, January.
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  9. P.J. Grossman, 1988. "Fiscal Decentralization and Government Size: An extension," Economics Discussion / Working Papers 88-16, The University of Western Australia, Department of Economics.
  10. Ferris, J. Stephen & Park, Soo-Bin & Winer, Stanley L., 2008. "Studying the role of political competition in the evolution of government size over long horizons," POLIS Working Papers 111, Institute of Public Policy and Public Choice - POLIS.
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  13. Ehdaie, Jaber, 1994. "Fiscal decentralization and the size of the government : an extension with evidence from cross-country data," Policy Research Working Paper Series 1387, The World Bank.
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  18. Jorge Martinez-Vazquez & Ming-Hung Yao, 2009. "Fiscal Decentralization and Public Sector Employment: A Cross-Country Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0903, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  19. 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.
  20. Mala Lalvani, 2002. "Can Decentralization Limit Government Growth? A Test of the Leviathan Hypothesis for the Indian Federation," Publius: The Journal of Federalism, Oxford University Press, vol. 32(3), pages 25-46, Summer.
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  28. Oates, Wallace E, 1985. "Searching for Leviathan: An Empirical Study," American Economic Review, American Economic Association, vol. 75(4), pages 748-57, September.
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