Government spending volatility and the size of nations

Arbeitspapier

This paper provides empirical evidence showing that smaller countries tend to have more volatile government spending for a sample of 160 countries from 1960 to 2000. We argue that the larger size of a country decreases the volatility of government spending because it acts as an insurance against idiosyncratic shocks, and it leads to increasing returns to scale due to the higher ability of the government to spread its cost of financing over a larger pool of taxpayers. The results are robust to different time and country samples, different econometric techniques and to several sets of control variables. The analysis also evinces that country size is negatively related to the discretionary part of government spending and to the volatilities of most of the government spending items.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 924

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policy ; Structure and Scope of Government: General ; Structure and Scope of Government: General
• Subject: Country Size ; Fiscal Policy ; fiscal volatility ; government size ; JEL: E62 ; Öffentliche Ausgaben ; Volatilität ; Finanzpolitik ; Landesgröße ; Vergleich ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Furceri, Davide ; Poplawski Ribeiro, Marcos
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/153358
• Last update: 10.03.2025, 11:42 AM CET