Politics versus Economics in the Explanation of Government – revised version: Studying the Role of Political Competition in the Evolution of Government Size over Long Horizons
This paper uses annual data from 1870 and 2000 in Canada to test whether overtly political variables interact with macroeconomic variables through government size. We begin by asking whether Canada’s macro data is consistent with political cycles, i.e., the hypothesis that macro cycles have been caused by overtly political influences such as the timing of elections, the political ideology of the governing party, the size of the winning majority, and/or whether there was a minority government. After finding some evidence of a correlation between political variables and output growth (but not inflation), the paper explores whether the transmission mechanism for these cycles could be through government size. To test for this relationship, the analysis uses an error correction model constructed under the base case assumption that political variables have no separate influence on government size. Competition among political parties is assumed to lead government size to converge on an equilibrium that depends only on the underlying tastes and technology of the community. The addition of political variables to this structure then allows us to assess whether explicit political considerations can still explain sympathetic variations in real government size once a complete long and short run model of the economic factors at play has been fully specified.
|Date of creation:||Apr 2004|
|Date of revision:||Oct 2008|
|Publication status:||Published: Revised version: Studying the Role of Political Competition in the Evolution of Government Size over Long Horizons, Public Choice, Vol. 137, No. 1/2 (October 2008), pp. 369–401; also published as CESifo Working Paper No. 1646|
|Contact details of provider:|| Postal: |
|Order Information:|| Email: |
When requesting a correction, please mention this item's handle: RePEc:car:carecp:04-06. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Renee Lortie)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.