Journal Article

No. 2013-38 | October 01, 2013
The Impact of Financial Openness on the Size of Utility-enhancing Government PDF Icon

Abstract

In this paper, the authors employ a portfolio approach based on a two-country world to study the impact of financial openness on the size of government and on other key economic variables, including the consumption-wealth ratio, the growth rate of wealth, and welfare (assuming that public spending is utility enhancing). The model suggests that the size of government, the consumption-wealth ratio, and welfare should be greater in an open economy because of higher productivity and/or less volatility because of risk sharing. The theoretical results for the growth rate depend on differences in productivity and in consumption-wealth ratios. The empirical evidence — based on a sample of 49 countries from 1970 to 2009 — broadly supports the main theoretical results of the model.

Data Set

Data sets for articles published in "Economics" are available at Dataverse. Please have a look at our repository.

The data set for this article can be found at: http://dx.doi.org/10.7910/DVN/23327

JEL Classification

F41 F43

Citation

Iñaki Erauskin (2013). The Impact of Financial Openness on the Size of Utility-enhancing Government. Economics: The Open-Access, Open-Assessment E-Journal, 7 (2013-38): 1—56. http://dx.doi.org/10.5018/economics-ejournal.ja.2013-38

Assessment

Downloads: 1149 (Journalarticle: 693, Discussionpaper: 456)
external link Search this article at Google Scholar



Comments and Questions