This paper is the first to examine the causal relationship between trade openness and government size using both aggregate and disaggregated government expenditure data, including data on social security. Our results indicate that examining the relationship separately for functional categories...

We examine whether trade openness influences government size. Using panel data, we find no evidence of a positive relationship. Rather, causality tests show that larger government size leads to lower openness, the opposite of what Rodrik [Rodrik, Dani, 1998, Why do more open economies have...