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Determinants of government size: evidence from China

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  • Alfred Wu

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  • Mi Lin

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Abstract

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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Suggested Citation

  • Alfred Wu & Mi Lin, 2012. "Determinants of government size: evidence from China," Public Choice, Springer, vol. 151(1), pages 255-270, April.
  • Handle: RePEc:kap:pubcho:v:151:y:2012:i:1:p:255-270
    DOI: 10.1007/s11127-010-9746-y
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    References listed on IDEAS

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    Cited by:

    1. Hassan Mohammadi & Rati Ram, 2015. "Economic Development and Government Spending: An Exploration of Wagner’s Hypothesis during Fifty Years of Growth in East Asia," Economies, MDPI, Open Access Journal, vol. 3(4), pages 1-11, October.
    2. Wu, Alfred M. & Wang, Wen, 2013. "Determinants of Expenditure Decentralization: Evidence from China," World Development, Elsevier, vol. 46(C), pages 176-184.
    3. Brehm, Stefan, 2013. "Fiscal Incentives, Public Spending, and Productivity – County-Level Evidence from a Chinese Province," World Development, Elsevier, vol. 46(C), pages 92-103.
    4. repec:cuf:journl:y:2017:v:18:i:1:qian:zhang is not listed on IDEAS
    5. Jia, Junxue & Guo, Qingwang & Zhang, Jing, 2014. "Fiscal decentralization and local expenditure policy in China," China Economic Review, Elsevier, vol. 28(C), pages 107-122.
    6. Chien-Chiang Lee & Chi-Chuan Lee & Chun-Ping Chang, 2015. "Globalization, Economic Growth and Institutional Development in China," Global Economic Review, Taylor & Francis Journals, vol. 44(1), pages 31-63, March.
    7. Jean-Paul Faguet & Fabio Sánchez, 2014. "Decentralization and access to social services in Colombia," Public Choice, Springer, vol. 160(1), pages 227-249, July.
    8. Chen, Yang & Regis, Paulo José, 2014. "Strategic interactions in corporate tax between Chinese local governments," RIEI Working Papers 2014-01, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration, revised 27 Oct 2015.
    9. repec:eco:journ1:2017-04-47 is not listed on IDEAS
    10. Wang, Zhiguo & Ma, Liang, 2012. "New Development of Fiscal Decentralization in China," MPRA Paper 36918, University Library of Munich, Germany.
    11. Zhiguo Wang & Liang Ma, 2014. "Fiscal Decentralization in China: A Literature Review," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 51-65, May.
    12. repec:spr:chfecr:v:5:y:2017:i:1:d:10.1186_s40589-017-0054-2 is not listed on IDEAS

    More about this item

    Keywords

    Government size; Wagner’s law; Scale effects; Openness to trade; Fiscal decentralization; H11; H61;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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