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Government Size (government + size)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

Government size and openness revisited: the case of financial globalization

KYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 3 2009
Alena Kimakova
SUMMARY The volatility of international capital flows to emerging markets has been well documented. Financial globalization may not in general fulfill its theoretical role as a risk sharing mechanism in financially underdeveloped economies, and hence may provide an impetus for compensating government spending. Comparative studies of the public sector have provided evidence of a robust positive association between government size and openness of the economy to trade flows. This paper extends the existing literature by investigating the relationship between government size and financial openness for 87 developing and developed countries between 1976 and 2003. The analysis reveals a positive relationship between exposure to international capital flows and government size. Furthermore, interacting capital flows with income levels shows that richer open economies tend to have smaller government size. These findings are consistent with the hypothesis that benefits of financial integration, in terms of improved risk-sharing and consumption smoothing, accrue only beyond a certain minimum level of financial development. [source]

Government Spending and the Taylor Principle

JOURNAL OF MONEY, CREDIT AND BANKING, Issue 1 2009
GISLE JAMES NATVIK
public expenditures; Taylor principle; fiscal policy rules; rule-of-thumb consumers This paper explores how government size affects the scope for equilibrium indeterminacy in a New Keynesian economy, where part of the population live hand-to-mouth. The main result is that a higher level of public consumption is likely to generate indeterminacy and render the Taylor principle insufficient as criterion for equilibrium uniqueness. This holds even though fiscal policy serves to reduce swings in current income. Only if government consumption is a substitute for private consumption, will it narrow the scope for indeterminacy. Hence monetary policy should be conducted with an eye to the amount and composition of government consumption. [source]

Regional Income Disparity and the Size of the Public Sector

JOURNAL OF PUBLIC ECONOMIC THEORY, Issue 5 2009
MICHELE GIUSEPPE GIURANNO
This paper explores the impact of income inequality between jurisdictions on government decision making affecting the size of the public sector. We model policy choices as the outcome of regional representatives' negotiations in the legislature. We show that the more unequal interregional income distribution is, the greater the underprovision of public goods. More specifically, greater interregional income disparity leads to a smaller public sector. A wealthier economy as a result may have a relatively smaller government size when income disparity increases. [source]

The Size and Composition of Government Spending in Europe and Its Impact on Well-Being

KYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 3 2010
Zohal Hessami
SUMMARY This paper empirically analyzes whether large governments in Europe reflect efficient responses to a changing social and economic environment (,welfare economic view') as opposed to wasteful spending (,public choice view'). To this end, the effect of government size on subjective well-being is estimated in a combined survey and country-level dataset covering 153,268 respondents from twelve EU countries over the 1990,2000 period. The first finding is an inversely U-shaped relationship between government size and well-being. In addition, the analysis suggests that given the high institutional quality as compared to other parts of the world there might be scope for a further enlargement of governments in the EU from a well-being perspective. However, one must acknowledge that the effect on well-being may be quite small and that democratic societies in Europe have no experience with even larger governments. The investigation also reveals that the impact of government size on well-being depends negatively on levels of corruption and positively on the extent of decentralization. Moreover, left-wing voters and low-income earners are the main beneficiaries of a large public sector. Finally, in all twelve EU countries included in the sample higher levels of well-being could have been achieved by allocating a higher share of public resources to education, while Finland and Germany could have given an additional boost to well-being by cutting expenditures on social protection. [source]

Government size and openness revisited: the case of financial globalization

KYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 3 2009
Alena Kimakova
SUMMARY The volatility of international capital flows to emerging markets has been well documented. Financial globalization may not in general fulfill its theoretical role as a risk sharing mechanism in financially underdeveloped economies, and hence may provide an impetus for compensating government spending. Comparative studies of the public sector have provided evidence of a robust positive association between government size and openness of the economy to trade flows. This paper extends the existing literature by investigating the relationship between government size and financial openness for 87 developing and developed countries between 1976 and 2003. The analysis reveals a positive relationship between exposure to international capital flows and government size. Furthermore, interacting capital flows with income levels shows that richer open economies tend to have smaller government size. These findings are consistent with the hypothesis that benefits of financial integration, in terms of improved risk-sharing and consumption smoothing, accrue only beyond a certain minimum level of financial development. [source]