Democratic age and the size of governmen

Christopher Boudreaux

Economics Bulletin, 2015, vol. 35, issue 3, 1531-1542

Abstract: One institutional characteristic of democracy is that it provides incentives to allocate resources towards rent seeking and other unproductive activities. Countries that have been democratic for long periods of time allow for sectors to become captured, special interest groups to flourish, and rent seeking activities to replace entrepreneurship via the market system. This study empirically analyzes the relationship between democratic age and the size of the public sector, and it finds that as democracies mature, government spending increases as a share of the market. The results suggest that a decade increase in the democratic age of a country is associated with a 2% to 3% increase in government spending.

Keywords: democratic age; government spending; public sector (search for similar items in EconPapers)
JEL-codes: H1 H5 (search for similar items in EconPapers)
Date: 2015-07-11
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Citations: View citations in EconPapers (1)

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