Macroeconomic risk and the (de)stabilising role of government size

Emilio Colombo, Patrizio Tirelli, Fabrizio Carmignani

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review

13 Citazioni (Scopus)

Abstract

Is government size the desirable response to macroeconomic risk, or it is the consequence of distorted political incentives with adverse effects on macroeconomic volatility? This paper reconsiders the mutual interdependence between government size and growth volatility in a large sample of countries within a system of simultaneous equations. We find that higher volatility is associated with larger government size and vice versa. Thus emphasis on government size as a mean capable, per se, of reducing macroeconomic risk is ill-conceived. We also identify a set of institutional limits to government discretion that also have beneficial effects on volatility. These include domestic political institutions, de facto central bank independence and a stable nominal exchange rate regime. © 2011 Elsevier B.V.
Lingua originaleEnglish
pagine (da-a)781-790
Numero di pagine10
RivistaEuropean Journal of Political Economy
Volume27
DOI
Stato di pubblicazionePubblicato - 2011

Keywords

  • Economics and Econometrics
  • Financial openness
  • Government expenditure
  • Output volatility
  • Political Science and International Relations
  • Political institutions
  • Trade openness

Fingerprint Entra nei temi di ricerca di 'Macroeconomic risk and the (de)stabilising role of government size'. Insieme formano una fingerprint unica.

Cita questo