OECD Economics Department Working Papers
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Government Consumption Volatility and the Size of Nations
The aim of this paper is to analyze the relation between the volatility of government consumption
and country size. Using a sample of 160 countries from 1960 to 2000 the main findings of our empirical
analysis suggest that: 1) smaller countries have more volatile non-discretionary and discretionary
government consumption, and also a more volatile government size; 2) the relation between government
spending volatility and the size of a country is more negative for more volatile economies; 3) the relation
between government consumption volatility and country size is more negative for functions of government
spending that are characterized by a high level on non-rivality. The results are robust to different time and
country samples, different econometric techniques and to several sets of control variables.
Keywords: fiscal volatility, country size, government size, fiscal policy
JEL:
H10: Public Economics / Structure and Scope of Government / Structure and Scope of Government: General;
E62: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Fiscal Policy
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