Economic performance, government size, and institutional quality

Antonio Afonso and Joao Jalles

Empirica, 2016, vol. 43, issue 1, 83-109

Abstract: This paper studies the empirical link between government size, institutions and economic activity using a panel of 140 countries over 40 years. Our results, robust under different econometric techniques, show mostly a negative effect of government size on output, while institutional quality has generally a positive impact. Moreover, the detrimental effect of government size on economic activity is stronger the lower institutional quality, and the positive effect of institutional quality on output increases with smaller government sizes. Copyright Springer Science+Business Media New York 2016

Keywords: Production function; Institutions; Globalization; GMM; Pooled mean group; Common correlated effects; C10; C23; H11; H30; O40 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s10663-015-9294-2

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