Does trade openness systematically imply bigger governments, as proposed by Rodrik (1998)? This paper presents a novel and more refined explanation for when and why international trade may enlarge the public sector. We propose that trade openness is associated with bigger governments if (i) the...

Purpose - The purpose of this paper is to examine the causal link between trade openness and government size for the five largest economies in Africa taking into account the role of compensation hypothesis in an economy. Design/methodology/approach - Time series data for five countries covering...

This paper investigates how government size influences the responses of government expenditure and economic growth to broad dollar shocks in 155 trade-heavy countries across 6 continents from 1995 to 2019. In most cases, we document that the magnitude of contractions in expenditures and economic...

A good deal of time has been devoted to whether more open economies have bigger governments (compensation hypothesis) or smaller ones (efficiency hypothesis). However, most of the research has been focused mainly on trade openness, which is clearly restrictive in a world with increasingly...

Purpose – The purpose of this paper is to examine the causal link between trade openness and government size for the five largest economies in Africa taking into account the role of compensation hypothesis in an economy.Design/methodology/approach – Time series data for five countries...

Does trade openness systematically imply bigger governments, as proposed by Rodrik (1998)? This paper presents a novel and more refined explanation for when and why international trade may enlarge the public sector. We propose that trade openness is associated with bigger governments if (i) the...

This article examines the potential role of government size in explaining differences in output volatility across OECD countries in the context of the latest recession. There is some evidence to suggest that government size as measured by the share of expenditure in GDP has a modest negative...

Government is often considered the safe sector of an open economy that provides households with insurance against external risk exposure. Among highly integrated economies, however, households should be able to exploit common financial markets to insure themselves. In this paper we examine the...