Government size, trade openness, and intersectoral income fluctuation an international panel analysis Daehaeng Kim and Chul-In Lee
By: Kim, Daehaeng
.
Contributor(s): Lee, Chul-In.
Material type: 
ArticlePublisher: 2021Subject(s): GASTO PUBLICO | INCERTIDUMBRE | MODELOS DE SIMULACIÓN
In:
Public Finance Review v. 49, n. 2, March 2021, p. 294-332Summary: Using the between-sector variation in income as a new measure of economic uncertainty, this article proposes simple models and supportive empirical evidence for the simultaneous relationship between economic uncertainty and government size in the open economy setting. Main empirical findings are that (i) a larger government reduces economic uncertainty, and, at the same time, (ii) an economy facing higher uncertainty has a larger government. However, (iii) the government tends to resort to redistributive policies to reduce the uncertainty, while (iv) government direct spending is also an effective option for the purpose. The study also finds that (v) the new cross-sectional measure of economic uncertainty tends to rise when a country becomes more open to international trade.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 581/2021/2-4 (Browse shelf) | Available | OP 581/2021/2-4 |
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Using the between-sector variation in income as a new measure of economic uncertainty, this article proposes simple models and supportive empirical evidence for the simultaneous relationship between economic uncertainty and government size in the open economy setting. Main empirical findings are that (i) a larger government reduces economic uncertainty, and, at the same time, (ii) an economy facing higher uncertainty has a larger government. However, (iii) the government tends to resort to redistributive policies to reduce the uncertainty, while (iv) government direct spending is also an effective option for the purpose. The study also finds that (v) the new cross-sectional measure of economic uncertainty tends to rise when a country becomes more open to international trade.
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