The relationship between trade openness and government size: Does disaggregating government expenditure matter?

2012 ◽  
Vol 34 (1) ◽  
pp. 239-252 ◽  
Author(s):  
Michael Benarroch ◽  
Manish Pandey
Keyword(s):  
Trade Openness ◽  
Government Expenditure ◽  
Government Size ◽  
The Relationship

scholarly journals Is the Compensation Hypothesis Valid for Turkey?

2015 ◽  
Author(s):  
Murat Can Genç ◽  
Osman Murat Telatar
Keyword(s):  
Trade Openness ◽  
Government Expenditure ◽  
The Other ◽  
Cointegration Test ◽  
Government Size ◽  
Annual Data ◽  
Correction Model ◽  
Long Run ◽  
The Government ◽  
Compensation Hypothesis

Increases of trade openness in an economy raise the external risks in globalization. The societies demand on increases of the government expenditure in order to compensate for their risks. Hence the more trade openness may cause the more government size. This relation is named as compensation hypothesis in the literature has been comprehensively discussed by Rodrik (1998) but started by Cameron (1978). This paper attempts to analyze the cointegration and causality relationships between trade openness and government size in Turkey, utilizing annual data for the period 1980–2013. The existence of the long run relationship between trade openness and government size is investigated by applying Engle and Granger (1987) cointegration test. The empirical findings of cointegration test stated that the series are cointegrated. On the other hand the results of error correction model indicate that there is a unidirectional causality from trade openness to government size. The significance of this results state that the compensation hypothesis is valid for Turkey.

scholarly journals Oil depletion and quality of democracy in selected Middle-East countries

2018 ◽  
Vol 68 (1) ◽  
pp. 101-114
Author(s):  
Lotfali Agheli
Keyword(s):  
Oil And Gas ◽  
Trade Openness ◽  
Government Expenditure ◽  
Political Stability ◽  
Modern Technology ◽  
Government Size ◽  
Quality Of Democracy ◽  
Middle East Countries ◽  
Economic Ties

Oil-abundant countries, Iran, Iraq and the Gulf Cooperation Council (GCC) countries try to improve democratic institutions and to manage their chronically big governments, while experiencing decreased world oil prices. These countries pursue open door policies. Most of the foreign revenues of the region stem from oil and gas exports. Thus, how to manage the production and exports of fossil resources is of great importance. This study aims to analyse the effects of quality of democracy, government size, and the degree of openness in explaining depletion of reserves between 1985 and 2015. After testing for panel unit root and co-integration, a panel data model was estimated considering random effects. The results indicate that democratisation and political stability causes higher depletion of oil. In addition, government size affects depletion in a non-linear form, so that oil production is maximised, when government expenditure accounts for nearly 14% of GDP, on average. Furthermore, trade openness positively impacts on the oil depletion. In this case study, higher oil depletion follows strengthening democratic foundations, resizing the public sector, expanding politico-economic ties with trade partners, and applying the modern technology in the upstream oil industries.

scholarly journals Relationship between Financial Development and Economic Growth: Empirical Evidence in Indonesia

2018 ◽  
Vol 10 (12) ◽  
pp. 37 ◽  
Author(s):  
Hafnida Hasan
Keyword(s):  
Economic Growth ◽  
Empirical Evidence ◽  
Granger Causality ◽  
Financial Development ◽  
Trade Openness ◽  
Government Expenditure ◽  
Long Run ◽  
Push Forward ◽  
Using Data ◽  
The Relationship

The aim of this paper to examine the relationship between financial development and economic growth in Indonesia by using data from 1986 until 2014. Johansen co-integration and Granger causality are utilized to analyze the data. The financial development is measured by the ratio of broad money and other control variables such as trade openness and government expenditure. The finding indicates that there is long run relationship between financial development and economic growth. Meanwhile, a unidirectional relationship had been found, it come from economic growth to financial development. Therefore, a policy to increase economic growth will push forward in proper to improve financial development in Indonesia.

scholarly journals Do policies and institutions matter for pre-tax income inequality? Cross-country evidence

2021 ◽  
Author(s):  
Damián Vergara
Keyword(s):  
Economic Policy ◽  
Income Inequality ◽  
Trade Openness ◽  
Government Expenditure ◽  
Rent Seeking ◽  
Income Taxation ◽  
Political Exclusion ◽  
Cross Country ◽  
The Relationship

AbstractDo policies and institutions matter for pre-tax income inequality? I build an annual panel of 43 countries for the period 1980–2016 to document cross-country facts. I find robust correlations between pre-tax income shares and economic policy—financial development, trade openness, government expenditure, and income taxation—even after controlling for economic development. I further find that proxies of institutional quality—e.g., state development, corruption, or political exclusion—mediate the relationship between top income shares and economic policy, in particular for trade openness and government expenditure. The role of institutions in allowing or limiting rent-seeking can rationalize the results.

scholarly journals Government Size and Economic Growth in Italy: A Time-series Analysis

2016 ◽  
Vol 12 (7) ◽  
pp. 149 ◽  
Author(s):  
Francesco Forte ◽  
Cosimo Magazzino
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Government Expenditure ◽  
Empirical Literature ◽  
Government Size ◽  
Annual Data ◽  
Economic Growth Rate ◽  
The Public ◽  
Shape Curve ◽  
The Relationship

The aim of this paper is to empirically assess the relationship between government size and economic growth. Using time series methodologies applied to annual data for Italy, the effect of public expenditure, unemployment, and fiscal reforms on economic activity have been analysed. The data used in these analyses have been collected and shown in Forte (2011). The analysis covered a very long period, 1861-2008. Our results show the presence of a non-linear relationship between the size of the public sector (measured by the share of government expenditure over GDP) and the economic growth rate for Italy. In general, the presence of an inverted “U-shape” curve, which emerges for the last two decades, suggests that expenditure cuts might be faster than GDP dynamic. This result is in line with recent empirical literature on this issue. Interestingly, for the monarchic years, it has been found that the zero budget constraint provoked a slower aggregate income variation.

Public Expenditure and Economic Growth: Evidence from the Developing Countries

2020 ◽  
Vol 9 (3) ◽  
pp. 228-236
Author(s):  
Deepti Ahuja ◽  
Deepak Pandit
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Public Expenditure ◽  
Trade Openness ◽  
Government Expenditure ◽  
Public Spending ◽  
Set Covering ◽  
Control Variables ◽  
Data Set ◽  
The Relationship

Regardless of theoretical grounds that presumed a positive relationship between government spending and economic growth, the extant research on this nexus is inclusive. This article re-examines the relationship between public expenditure and economic growth using more copious panel data set covering 59 countries in 1990–2019. Our empirical results confirm the unidirectional causality between economic growth and government expenditure where the causation runs between public spending and GDP growth. The results at large support the Keynesian framework that asserts the importance of government expenditure in stimulating economic growth. Further, the analysis reveals that after considering all the control variables such as trade accessibility, investment and inflation public spending positively affects economic growth. With regards to control variables, it was found that investment has a significant and positive bearing on economic growth. Evidence from the regression estimates further displays that trade openness encourages evolution in developing countries. However, population growth and unemployment have a detrimental effect on economic growth.

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