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Population size and the size of government

Tim Krieger and Daniel Meierrieks ()

European Journal of Political Economy, 2020, vol. 61, issue C

Abstract: We examine the effect of population size on government size for a panel of 130 countries for the period between 1970 and 2014. We show that previous analyses of the nexus between population size and government size are incorrectly specified and fail to consider the influence of cross-sectional dependence, non-stationarity and cointegration. Using a panel time-series approach that adequately accounts for these issues, we find that population size has a positive long-run effect on government size. This finding suggests that effects of population size that increase government size (primarily due to the costs of heterogeneity, congestion, crime and conflict) dominate effects that reduce government size (primarily due to scale economies).

Keywords: Government size; Population size; Non-stationarity; Cross-sectional dependence; Panel cointegration (search for similar items in EconPapers)
JEL-codes: H11 H50 (search for similar items in EconPapers)
Date: 2020
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Journal Article: Population size and the size of government (2020) Downloads
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DOI: 10.1016/j.ejpoleco.2019.101837

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European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung

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