Does economic globalization affect government spending? a meta‑analysis Philipp Heimberger
By: Heimberger, Philipp
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Material type: 
ArticlePublisher: 2021Subject(s): GASTO PUBLICO | GLOBALIZACION (ECONOMIA) | MODELOS ECONOMETRICOS
In:
Public Choice v. 187, n. 3-4, June 2021, p. 349-374Summary: Despite extensive econometric testing, the research literature has been unable to draw firm conclusions regarding the effect of economic globalization on government spending. This paper explores various dimensions of the wide variation in existing estimates of the globalization-spending relationship. By applying meta-analysis and meta-regression methods to a unique data set consisting of 1182 observations from 79 peer-reviewed articles, we find that the evidence rejects theoretical views predicting strong unidirectional effects of economic globalization on government spending. Once we account for publication selection bias, no evidence of a non-zero average empirical effect is found. More importantly, however, the type of government spending matters: while the results are consistent with the view that economic globalization exerts small-to-moderate downward pressure on government spending for social protection and welfare, other spending components are affected less significantly. The meta-regression analysis shows further that several factors influence the globalization-spending estimates reported in the literature, including the choice of the economic globalization indicator, details of the econometric specifications, and publication characteristics.
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| OP 1443/2021/187/1/2 Public Choice | OP 1443/2021/187/1/2-1 Special issue in honor of Janos Kornai | OP 1443/2021/187/3/4 Public Choice | OP 1443/2021/187/3/4-1 Does economic globalization affect government spending? | OP 1443/2021/187/3/4-2 Government ideology and fiscal consolidation | OP 1443/2021/188/1/2 Public Choice | OP 1443/2021/188/1/2-1 Do fiscal rules constrain political budget cycles? |
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Despite extensive econometric testing, the research literature has been unable to draw firm conclusions regarding the effect of economic globalization on government spending. This paper explores various dimensions of the wide variation in existing estimates of the globalization-spending relationship. By applying meta-analysis and meta-regression methods to a unique data set consisting of 1182 observations from 79 peer-reviewed articles, we find that the evidence rejects theoretical views predicting strong unidirectional effects of economic globalization on government spending. Once we account for publication selection bias, no evidence of a non-zero average empirical effect is found. More importantly, however, the type of government spending matters: while the results are consistent with the view that economic globalization exerts small-to-moderate downward pressure on government spending for social protection and welfare, other spending components are affected less significantly. The meta-regression analysis shows further that several factors influence the globalization-spending estimates reported in the literature, including the choice of the economic globalization indicator, details of the econometric specifications, and publication characteristics.
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