Year: 1996
Type: article
Abstract: There exists a positive correlation between an economy's exposure to international trade and the size of its government. The correlation holds for most measures of government spending, in low‐as well as high‐income samples, and is robust to the inclusion of a wide range of controls. One explanation is that government spending plays a risk‐reducing role in economies exposed to a significant amount of external risk. The Paper provides a range of evidence consistent with this hypothesis. In particular, the relationship between openness and government size is strongest when terms‐of‐trade risk is highest.
Source: Journal of Political Economy
DOI: 10.3386/w5537
Author: Dani Rodrik
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2891903900