Trade openness, capital openness and government size
This paper provides empirical evidence of the relation between trade openness, capital openness and government expenditures in a cross sectional time-series context. It is shown that capital openness is significantly and negatively related to government expenditures in line with the conventional wisdom that capital mobility may undermine the ability of governments to maintain larger public sectors. More importantly, the compensation hypothesis originally proposed by Rodrik (1998) and traceable back to Cameron (1978) is not in general supported by the data.
|Date of creation:||2007|
|Date of revision:|
|Publication status:||Published in Journal of Public Policy 27.2(2007): pp. 215-247|
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