Prague Economic Papers 2007, 16(2):130-142 | DOI: 10.18267/j.pep.302

Factors of the Size of Government in Developed Countries

Boris Gramc
University of Ljubljana, Faculty of Administration, Gosarjeva ulica 5, SI - 1000 Ljubljana (boris.gramc@fu.uni-lj.si).

The purpose of the analysis presented in the paper is to identify various factors, including economic, social, political, demographic and cultural ones, that could shape the differences in the size of government across countries and to verify their effect with the use of econometric analysis. The analysis focuses on "budgetary" government, usually measured with some government spending ratio, as well as on "non-budgetary" government, measured with the index of the extent of regulation in the economy. The results of the analysis show that economic factors are more important in explaining the variation in the size of government consumption and in the size of non-budgetary government, whereas political, social and cultural factors are more important in explaining the variation in the size of transfers. Besides, the results also indicate, that there exists "trade-off" between budgetary and non-budgetary government.

Keywords: economic policy, the size of the government, econometrics, politics
JEL classification: H11, H60

Published: January 1, 2007  Show citation

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Gramc, B. (2007). Factors of the Size of Government in Developed Countries. Prague Economic Papers, 16(2), 130-142. doi: 10.18267/j.pep.302
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