Globalisation and the Composition of Government SpendingAn analysis for OECD countries
- Norman Gemmell 1
- Richard Kneller 1
- Ismael Sanz 2
- 1 University of Nottingham
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2
Universidad Complutense de Madrid
info
ISSN: 1988-8767
Argitalpen urtea: 2006
Zenbakia: 289
Mota: Laneko dokumentua
Beste argitalpen batzuk: Notas técnicas: [continuación de Documentos de Trabajo FUNCAS]
Laburpena
The ‘compensation’ and ‘efficiency’ hypotheses propose that globalisation affects both the total, and composition of public expenditures in quite different ways. Under the former economic insecurity leads to an expansion of the public sector and social expenditures, whereas under the efficiency hypothesis demands for lower taxes encourage a smaller public sector with greater emphasis on ‘privately productive’ spending. We test these hypotheses for a sample of OECD countries from 1980-1997. Using both the inward stock of FDI and openness as measures of globalisation we find no effect on the size of government, but that FDI significantly affects the composition of spending strongly supporting the compensation hypothesis.