Size Of Government Research Articles

Under Treasury Control: Japan’s Emergence as an Egalitarian, Small-government State

This study analyses the formation of a policy system that reduced income inequality in Japan in the 1960s, a period of rapid economic growth. According to comparative research, the Japanese state is an example of small government with income equality. Japan’s income inequality rose in the 1950s, and at that point, the government faced a decision about how to reduce income inequality, and particularly whether to expand social security and government size. This study uses primary materials to analyse how and why Japan became more egalitarian while maintaining a small-government state, focusing on fiscal rules set by the Ministry of Finance, which adopted a balanced budget rule that prevented the issuance of public bonds and limited the tax burden ratio. As reflected in the government’s Income Doubling Plan, this development led to a trade-off among factors, such as social security, public works, and tax cuts, which led to the subordination of social security. Despite public debt issuance in 1965, which was contrary to two fiscal rules, social security did not expand because of fiscal rigidification. Throughout the 1960s, spending on public works and income tax cuts was prioritised over social security, resulting in small government but also income equality.

Deciphering the non-linear nexus between government size and inflation in MENA countries: an application of dynamic-panel threshold model

Contradictory to conventional economic theory, which foresees any increase in the size of government as inflationary, this article provides evidence that the reaction of price levels to changes in the size of government is nonlinear. The price levels do not necessarily increase in response to a rise in the size of the government but only up to a certain threshold or optimal level. Accordingly, this paper utilizes the dynamic panel threshold model to examine the threshold effects of government size (measured as government final consumption expenditure as a proportion of GDP) on inflation using a sample of 10 selected MENA countries from 1980 to 2019. The findings of this study stand out in several ways. First, the results support the nonlinear relationship between government size and inflation in the study area. Second, the government size’s estimated threshold level is equivalent to 12.46%. Third, government size negatively impacts inflation in the regime of small governments up to the threshold level. The impact turns positive once the government size goes beyond the threshold level in a regime of large size of government. These findings have ramifications for the conduct of fiscal policy. Policymakers in the MENA region can increase the size of government till it reaches the threshold level without exerting any upward pressure on price levels.

Accounting for large fiscal government size

Accounting for large fiscal government size

Government Size in Response to Trade Openness and General Government Debt

Government Size in Response to Trade Openness and General Government Debt

Unpacking Province Creation in The Philippines

To enhance service delivery and local democracy, legislators have tinkered with size or status of local governments in the Philippines. This elasticity in local borders has been more evident at the province level, the highest local government tier. Since 1987, a new province is birthed roughly every three years. As the determinants and mechanisms of contemporary province fragmentation are under-examined, this article investigates, at several policymaking levels and dimensions, attempts to redraw borders of Philippine provinces. Framed by an institutional framework and a case-study approach, and employing a veto-player analysis, heuristic cases of two provinces (Quezon and Zamboanga del Sur) were unpacked and compared. Findings reveal that there is a large and fragmented veto-player group in the area of territorial rescaling of provinces. Congruence of preferences among veto players was observed to be influenced by territorial leveraging, pivot on networks and reciprocity norm, and mirroring of preferences. The tenacity and strategic actions of reform agent or policy entrepreneur (usually the congressman), sometimes assisted by social movement, is likewise found crucial in the pathways leading to reform outcomes. In a simple cross-case analysis of recent reform attempts, findings also suggest that the provinces’ core-periphery location pattern, and proposed type of spatio-jurisdictional partition are associated with reform outcomes.

Does administrative division adjustment reduce air pollution? Evidence from city-county mergers in China

Administrative division adjustment plays a crucial role in transforming the spatial layout of cities and effectively contributes to green transformation and high-quality regional economic development. We empirically investigate the impact of administrative division adjustment, exemplified by city-county mergers (CCM), on air pollution using the difference-in-differences method. Our results demonstrate that CCM significantly reduces air pollution, which passes a series of robustness tests including heterogeneous treatment effect tests. Mechanism analysis reveals that CCM reduces air pollution by optimizing industrial structure, promoting market allocation, and constraining government size; geo-climatic conditions significantly moderate the haze reduction effect of CCM. Further analyses indicate that the haze reduction effect of CCM is more pronounced in the eastern and western regions, the southeast regions of the Hu Line, and non-resource-based regions. Moreover, CCM not only alleviates air pollution in border areas and mitigates the pollution boundary effect but also yields the social welfare effect. This paper provides valuable insights for maximizing the haze reduction potential of administrative division adjustment, understanding the role of Chinese-style decentralization in regional air pollution management, especially in border areas, and supporting the achievement of carbon emission reduction and sustainable development goals.

Government size and the effectiveness of fiscal policy: the bigger the better?

Abstract This study investigates the effect of government size, as measured by the tax revenue to gross domestic product (tax-GDP) ratio, on output responses to increases in government purchases. First, we show that in a standard static neoclassical model, the stimulus effect of fiscal expansion on output increases with the tax-GDP ratio. This finding is quantitatively confirmed using a dynamic neoclassical model with standard functional forms and parameter values. To empirically test the theoretical findings, we analyze the responses of macroeconomic variables to an unanticipated increase in government purchases for 12 Organisation for Economic Cooperation and Development (OECD) countries during 1985–2019 using a state-dependent local projection method. The estimation results reveal that while output responses to an unanticipated fiscal expansion are significantly positive when the tax-GDP ratio is high, they are statistically indistinguishable from zero when the ratio is low. Overall, our findings suggest that fiscal expansion can stimulate output more effectively at high tax rates, unlike the well-known predictions of the traditional Keynesian model.

Investigating the Relationship between Trade Openness and Government Size for Selected South Asian Countries

An essential assumption in the study is that trade openness creates external risk and government increases its expenditures for social protection against externally generated instability. When there are efficient bureaucrats, the size of government reduces to increase the trade openness. Trade openness creates volatility and bureaucratic efficiency may undercut the government consumption. Thus, the government addresses different challenges more efficiently and less costly due to efficient bureaucracy. This paper makes available the empirical evidence of the relationship between trade openness, bureaucratic efficiency and government size

Government emergency budgeting and disaster impact: Evidence from China

AbstractEmergency budgets have become indispensable fiscal tools for governments around the world to cope with disasters, but how governments determine the size of emergency budgets and to what extent such budgets are effective remain unclear. Drawing on organizational learning theory and using data collected from 30 provinces in China, we conduct a series of panel regression analysis and robustness checks to investigate the determinants and impact of emergency budgets. We find that both prior disaster experience and government fiscal ability as measured by budget surplus are positively related to the size of subnational governments' emergency budgets, but the interaction effect between the two is negative. Moreover, while emergency budgets can help maintain the level of government budget surplus, they only play a limited role in moderating the negative impact of disaster damage on governments' fiscal ability. In particular, this study reveals the importance of socioeconomic environment and organizational capacity for the decision‐making process and outcomes of emergency budgets, suggesting that subnational governments should always adopt a holistic approach and improve their financial preparedness for future emergencies by incorporating more information from past disasters and considering diverse drivers of the complex dynamics among emergency budgets, disaster experience, and government fiscal ability.

Are government budgets a visible stabilizer? Evidence from China since the tax-assignment reform

PurposeThis study quantitatively examines the relationship between economic fluctuations and government budget size in the context of China’s fiscal decentralization, drawing inspiration from theoretical predictions of the Keynesian view and empirical studies on other economies.Design/methodology/approachThe panel comprises 31 provinces or equivalents in mainland China, spanning from 1994 to 2019. Diverse estimation strategies including two-way fixed effect regression, the generalized method of moments (GMM) and threshold regressions are, utilized.FindingsThe results suggest that under the “tax-assignment system”, neither the central government’s fiscal transfers nor the provincial budgetary revenues or expenditures help reduce economic volatility. Surprisingly, some regression outcomes suggest that government size measures destabilize business cycles.Originality/valueWhile the study does not provide supportive evidence for the stabilizing effect of public budgets in Chinese provinces, it promotes a rethinking of the government’s intricate role in macroeconomic stabilization in the context of China’s fiscal decentralization.

Government Size and Tourism Employment: A case study of Khorasan Razavi

Government Size and Tourism Employment: A case study of Khorasan Razavi

The influence of audit findings and opinions on expenditure performance with the size of regional government as a moderating variable in the Regency/City Governments in North Sulawesi Province for the Fiscal Year 2017-2021

The influence of audit findings and opinions on expenditure performance with the size of regional government as a moderating variable in the Regency/City Governments in North Sulawesi Province for the Fiscal Year 2017-2021

Globalization and the “zero hunger” goal in Africa: Starving in an open world?

AbstractDespite commendable efforts to end hunger and achieve Sustainable Development Goal 2, the prevalence of undernourishment is still inadmissibly high, especially in Africa. Though important determinants of undernourishment have been documented, little is known about the role of globalization. This paper aims to fill this gap using a sample of 48 African countries over 2000–2020 period and data from the KOF globalization index and the World Bank dataset. The results from Driscoll and Kraay's Standard Errors and Instrumental Variable Generalized Method of Moments (IVGMM) methods show that globalization reduces both the prevalence of undernourishment and child stunting in African countries. Accounting for the dimensions of globalization, the results show that while economic globalization is negatively associated with food security, social and political globalization enhances it. Moreover, income growth, government size and access to electricity are identified as channels through which globalization reduces hunger in Africa. African governments should develop evidence‐based policies and interventions that leverage the opportunities presented by globalization to ensure food security.

Government participation in virtual negotiations: evidence from IPCC approval sessions

The Covid-19 pandemic challenged global governance in unprecedented ways by requiring intergovernmental meetings to be held online. For the Intergovernmental Panel on Climate Change (IPCC), this meant that the intergovernmental approval of the key findings of the Sixth Assessment Report (AR6) had to be conducted virtually. In this paper, we assess how the move away from face-to-face meetings affected country participation in IPCC approval sessions. Our findings demonstrate that virtual meetings increased the size of member governments’ delegations, but this did not necessarily translate into a greater number of interventions during the approval of the Summary for Policymakers (SPM) as time zone differences reduced engagement levels significantly—particularly for countries from the Pacific, East Asian, and Latin American regions whose delegations often found themselves in IPCC meetings late at night and early in the morning. These results offer initial, empirically robust evidence about what online meetings can and cannot achieve for promoting more inclusive global governance at a time when the IPCC and other organizations reflect on the future use of virtual and hybrid meeting formats.

The Influence of Local Government Size and Economic Growth on Local Government Financial Performance

Performance measurement is an important element in assessing the effectiveness of policy implementation, including financial regulations at the local government level. By measuring financial performance, we can obtain valuable feedback regarding the suitability and accuracy of implementing these regulations. The aim of this research is to analyze the influence of local government size and economic growth on local government financial performance. In this study, the sample used in this research was a purposive sampling sample, with the population of Regional Governments and Regency/City Regional People's Representative Councils (DPRD) in Indonesia in 2018.

Government size, institutional quality and economic welfare in Africa

PurposeMost African countries operate large government sizes but with little corresponding economic outcomes. Institutional economics however, show that strong institution is fundamental in promoting economic growth. This study examines the linkages between government size, institutional quality and economic welfare in Africa.Design/methodology/approachThis study deploys the System Generalized Method of Moments estimation strategy on panel data of 52 African economies from 2000–2018.FindingsThe result shows that government size has a negative impact on economic welfare, while institutional quality has a positive impact on economic welfare. The interaction of government size and institutional quality shows a positive impact on economic welfare, signifying synergy and complementarity. Thus, strong institutions counteract the adverse effects of large government size on economic welfare.Practical implicationsTo promote human development and economic welfare, and attain key Sustainable Development Goals such as good health and well-being, quality education, decent work and economic growth, African policy makers need to keep their government sizes at optimal levels and promote strong institutions.Originality/valueThis paper provides first-hand empirical evidence of the relevance of institutional quality in counteracting the adverse influence of large government size in Africa. It determines the thresholds of government size and uses a composite index as proxy for same. In addition, this study uses the World Governance Indicators and the Fraser Institute Economic Freedom Index as alternative measures of institutional quality and Gross Domestic Product per capita and Human Development Index as proxies for economic welfare.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2024-0075

The Impact of Inflation on Financial Sector Performance: Evidence from OECD Countries

Abstract This research article investigates the relationship between inflation and the performance of the financial sector within OECD countries, a group critical to global economic stability. The financial sector is a basis of sustainable economic growth, and its performance is heavily influenced by the macroeconomic environment, particularly inflation. This study analyses how inflation, alongside other significant factors such as real GDP growth, government size, trade openness, and interest rates, impacts the financial sector development. By examining data from 38 OECD countries over a 20-year period (2002-2021), this research employs a comprehensive approach using both static and dynamic panel regression models. The results consistently indicate a negative correlation between inflation and the key financial sector variables, suggesting that higher inflation levels undermine financial sector performance. These findings underscore the importance of maintaining low and stable inflation to foster an efficient and stable financial sector. This study makes a valuable contribution to the literature by focusing specifically on OECD countries, which are often seen as benchmarks for economic policies and financial systems.

오차수정모형을 이용한 금융발전의 영향요인 분석

This study empirically analyzed the effected determinants of global innovation, economic freedom, and GDP on financial development. An analysis was conducted by the OLS error correction model using panel data(N=224) from 2011 to 2019 of 28 countries. The results showed that economic freedom was the most influential factor in global financial development, and that global innovation and GDP also had a positive impact. Among components of economic freedom, property rights, money soundness, and market openness were found to have a positive impact on financial development, while regulations and government size were found to have a negative impact on financial development. And among components of global innovation, market sophistication, human capital research, infrastructure, knowledge and technology outputs, and business sophistication had an impact on financial development, but institutions and creative outputs did not appear to have an effect. This results has an academic importance of showing that economic freedom and innovation is more important factors than GDP for global financial development. Thus it is assumed that an advanced free-market economy system with a fair legal framework and a constant innovation is important for financial development in global environment where neo-protectionism is spreading.

Drivers of international fiscal spillovers

AbstractThis paper investigates the drivers of international fiscal spillovers across 62 countries for the period covering 1970–2021. Using the local projections method at the country‐pair level, fiscal spillovers are estimated as the cumulative response of the real gross domestic product (GDP) growth in spillover destination countries to a unit shock in the real government spending growth in spillover source countries. Pairwise estimation results (for 3782 country pairs) suggest that there are statistically significant fiscal spillovers for 36% of country pairs, whereas this ratio is 49% for country pairs within the euro area. For the median country pair, a unit shock of real government spending growth in the spillover source country results in about 0.09% of the increase in the real GDP growth of the spillover destination country, whereas this fiscal‐spillover estimate goes up to 0.42% when the spillover source is in the euro area, and the spillover destination is an oil producing country. A secondary investigation based on the Heckman selection model is used to identify the drivers of fiscal spillovers across country pairs, where the existence of statistically significant fiscal spillovers is shown to be connected to the proximity between countries. The size of fiscal spillovers is further shown to increase with the initial (as of 1970) country size, trade openness, and government size of the spillover source country, whereas it decreases with the initial country size and trade openness of the spillover destination country. Important policy suggestions follow.

Does international trade improve carbon productivity? Evidence from countries along the Belt and Road.

The Belt and Road Initiative proposed by China has significantly increased trade in countries along the Belt and Road (B&R). Since most of these countries are developing and emerging economies, the pressure to reduce carbon emissions poses a leading challenge for them. Carbon productivity has become a key indicator for assessing the degree of low-carbon development, as it can link economic development with CO2 emission reduction. However, few studies have investigated how international trade affects carbon productivity. Based on panel data from 43 countries along the B&R during 2001-2019, this paper uses a system GMM model to explore the impact of international trade on carbon productivity. Then, we divide the 43 countries in the sample into two groups according to their income levels to compare the different effects of international trade on carbon productivity. The results show that, first, the carbon productivity of the examined B&R countries has an overall increasing trend, and there is a significant heterogeneity of carbon productivity among countries with different income levels. Second, the effects of international trade, export, and import on carbon productivity are all significantly positive, and export's effect is higher than import. In the high-income group, carbon productivity is more likely to be improved by trade than in the middle (low)-income group. Third, economic development level, urbanization, and energy productivity are positively associated with carbon productivity, while CO2 per capita and government size inhibit carbon productivity improvement. Insight into the impact of international trade on carbon productivity provides theoretical support for B&R countries to better leverage foreign trade activities to achieve a green economy.