Exogenous volatility and the size of government in developing countries

Bruekner, Markus and Gradstein, Mark (2013) Exogenous volatility and the size of government in developing countries. Journal of Development Economics, 105 254-266. doi:10.1016/j.jdeveco.2013.08.005

Author Bruekner, Markus
Gradstein, Mark
Title Exogenous volatility and the size of government in developing countries
Journal name Journal of Development Economics   Check publisher's open access policy
ISSN 0304-3878
Publication date 2013-11-01
Sub-type Article (original research)
DOI 10.1016/j.jdeveco.2013.08.005
Open Access Status
Volume 105
Start page 254
End page 266
Total pages 13
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Language eng
Abstract This paper presents instrumental variables estimates of the effects of GDP per capita volatility on the size of government. We show that for a panel of 157 countries spanning more than half a century, rainfall volatility has a significant positive effect on GDP per capita volatility in countries with above median temperatures. In these countries rainfall volatility has also a significant positive reduced-form effect on the GDP share of government. There is no significant reduced-form effect in the sample of countries with below median temperatures where rainfall volatility has no significant effect on GDP per capita volatility. Using rainfall volatility as an instrumental variable in the sample of countries with above median temperatures yields that greater GDP per capita volatility leads to a significantly higher GDP share of government.
Keyword Volatility
Government size
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Non-UQ

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Economics Publications
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Created: Fri, 06 Feb 2015, 02:04:44 EST by Alys Hohnen on behalf of School of Economics