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Crises and Government: Some Empirical Evidence

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  • Jamie Bologna

    (West Virginia University, College of Business and Economics)

  • Andrew T. Young

    (West Virginia University, College of Business and Economics)

Abstract

We examine a panel of 70 countries during 1966-2010 and utilize Reinhart and Rogoff crisis dates to estimate the effects of crises on the size and scope of government over both 5-year and 10-year horizons. We also estimate cross section regressions using 40-year (1970-2010) changes in government variables. Banking crises appear to be associated with decreases in the size and scope of government, while sovereign external debt crises are associated with increases. Otherwise, the size and scope of government appears to be persistent to the extent that even crisis episodes fail to leave a significant mark upon them. A notable exception may be that, over 40-year periods, countries that spend more years in crisis are associated with weaker legal systems and property rights.

Suggested Citation

  • Jamie Bologna & Andrew T. Young, 2014. "Crises and Government: Some Empirical Evidence," Working Papers 14-36, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:14-36
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    Cited by:

    1. Bjørnskov, Christian & Rode, Martin, 2016. "And Yet It Grows: Crisis, Ideology, and Interventionist Policy Ratchets," Working Paper Series 1135, Research Institute of Industrial Economics.
    2. Sobel, Russell S., 2017. "The rise and decline of nations: the dynamic properties of institutional reform 1," Journal of Institutional Economics, Cambridge University Press, vol. 13(3), pages 549-574, September.
    3. repec:jpe:journl:1416 is not listed on IDEAS
    4. Jamie Bologna & Joshua C. Hall, 2014. "Economic Freedom Research: Some Comments and Suggestions," Working Papers 14-23, Department of Economics, West Virginia University.
    5. Ryan H. Murphy, 2019. "The long‐run effect of government ideology on economic freedom," Economic Affairs, Wiley Blackwell, vol. 39(1), pages 101-114, February.
    6. Muriuki, James & Hudson, Darren & Fuad, Syed & March, Raymond J. & Lacombe, Donald J., 2023. "Spillover effect of violent conflicts on food insecurity in sub-Saharan Africa," Food Policy, Elsevier, vol. 115(C).
    7. Justin Callais & Andrew T. Young, 2021. "Does constitutional entrenchment matter for economic freedom?," Contemporary Economic Policy, Western Economic Association International, vol. 39(4), pages 808-830, October.
    8. O'Reilly, Colin & Powell, Benjamin, 2015. "War and the growth of government," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 31-41.
    9. Bjørnskov, Christian, 2016. "Economic freedom and economic crises," European Journal of Political Economy, Elsevier, vol. 45(S), pages 11-23.
    10. Tushar Bharati & Mohammad Farhad & Michael Jetter, 2023. "On the relationship between trade openness and government size," The World Economy, Wiley Blackwell, vol. 46(7), pages 2102-2133, July.
    11. Jamie Bologna Pavlik & Estefania Lujan Padilla & Benjamin Powell, 2019. "Cultural Baggage: Do Immigrants Import Corruption?," Southern Economic Journal, John Wiley & Sons, vol. 85(4), pages 1243-1261, April.
    12. Powell, Benjamin & Clark, J.R. & Nowrasteh, Alex, 2017. "Does mass immigration destroy institutions? 1990s Israel as a natural experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 83-95.
    13. Callais, Justin T. & Young, Andrew T., 2023. "A rising tide that lifts all boats: An analysis of economic freedom and inequality using matching methods," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 744-777.
    14. Andersson, Fredrik NG, 2016. "A Blessing in Disguise? Banking Crises and Institutional Change," World Development, Elsevier, vol. 83(C), pages 135-147.
    15. Ryan H Murphy, 2020. "Does democracy die in recessions? A descriptive analysis of aggregate demand shortfalls and regime transition," Economic Affairs, Wiley Blackwell, vol. 40(1), pages 63-76, February.
    16. Kathleen M. Sheehan & Andrew T. Young, 2015. "It'S A Small World After All: Internet Access And Institutional Quality," Contemporary Economic Policy, Western Economic Association International, vol. 33(4), pages 649-667, October.
    17. Ryan H. Murphy & Taylor Leland Smith, 2018. "Aggregate demand shortfalls and economic freedom," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 31(1), pages 111-122, March.
    18. Saunoris, James W. & Payne, James E. & Sobel, Russell S., 2025. "Identifying the ‘deep roots’ of economic freedom with implications for policy and economic reform," Journal of Policy Modeling, Elsevier, vol. 47(1), pages 211-227.
    19. Asim Iqbal & Aftab Anwar & Khalil Ahmad, 2023. "Institutional Development And Business Freedom: Insights From Developing Nations," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 12(2), pages 457-465.
    20. Justin Callais & Kerianne Lawson, 2024. "Underperforming reformers: Examining disappointing cases of economic reforms," Kyklos, Wiley Blackwell, vol. 77(3), pages 593-615, August.
    21. Keith Barnatchez & Robert Lester, 2017. "The Relationship Between Economic Freedom And Economic Dynamism," Contemporary Economic Policy, Western Economic Association International, vol. 35(2), pages 358-372, April.

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    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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