Government Size and Trade Openness: Some Additional Insights

Liberati, Paolo (2013): Government Size and Trade Openness: Some Additional Insights.

Abstract

This paper provides additional insights on the relationship between government size and trade openness using a panel of countries drawn from the World Development Indicators and the Penn World Tables 7.0 from 1962 to 2009. It is shown that the compensation hypothesis proposed by Rodrik (1998) and revisited by Alesina and Wacziarg (1998) and by Ram (2009) cannot be attributed general validity. Rather, it may be driven by specific geographical areas.

• Item Type: MPRA Paper
• Language: English
• Keywords: Openness; Compensation hypothesis; Government Consumption; Trade
• Subjects: H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H77 - Intergovernmental Relations ; Federalism ; Secession; H - Public Economics > H5 - National Government Expenditures and Related Policies > H50 - General; H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government

References

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Ram R. (2009), “Openness, Country Size and Government Size: Additional Evidence from a Large Cross-Country Panel”, Journal of Public Economics, 93, 213-218.

Rodrik D. (1998), “Why Do More Open Economies Have Bigger Governments?”, Journal of Political Economy, 106, 997-1032.

Wacziarg R., Horn Welch K. (2008), “Trade Liberalization and Growth: New Evidence”, The World Bank Economic Review, 22, 187-231.