Political Economy of Trade Openness and Government Size

Ryo Arawatari

Economics and Politics, 2015, vol. 27, issue 1, 28-52

Abstract: type="main" xml:id="ecpo12049-abs-0001">

This paper proposes a theoretical model that may provide useful insights into the relationship between trade openness and the size of government, as well as a possible explanation for the results of empirical tests of such a relationship. We develop a Hecksher–Ohlin model with publicly provided goods, where the level of publicly provided goods is determined in a probabilistic voting framework. In this context, we show that the start of trade may increase or decrease government size depending on the capital-labor ratio in each country.

Date: 2015
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