Determinants of government size: Evidence from China

Wu, Alfred M. and Lin, Mi (2010): Determinants of government size: Evidence from China. Forthcoming in: Public Choice

Abstract

This paper investigates the determinants of government size at the provincial level in China. We employ the panel data model as a platform for empirical analysis and control for endogeneity in the study. Our study shows that openness to trade and foreign direct investment (FDI) may curtail government expansion, and that the provincial-level public sector is characterized by economies of scale. This study also documents that Wagner’s law does not hold true for China. Moreover, both expenditure decentralization and revenue decentralization contribute to the expansion of China’s government.

• Item Type: MPRA Paper
• Language: English
• Keywords: Government size - Wagner’s law - Scale effects - Openness to trade - Fiscal decentralization
• Subjects: H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government; H - Public Economics > H6 - National Budget, Deficit, and Debt > H61 - Budget ; Budget Systems

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