Examinando por Materia "Government size"
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Ítem The effects of wage volatility on growth(Elsevier, 2013-09) Jetter, Michael; Nikolsko-Rzhevskyy Alex; Smithc William T.; School of Economics and Finance, Universidad EAFIT; Department of Economics, Lehigh University; Department of Economics, University of Memphis.; Escuela de Economía y Finanzas; Economía; Estudios en Economía y EmpresaThis paper shows that the volatility of wages has significant effects on a country’s rate of economic growth. Our theoretical framework suggests two distinct channels in which wage volatility affects growth: a positive direct way and a negative indirect way. The direct effect stems from precautionary savings, whereas the indirect effect works through the mediating role of government size. In the empirical part, we use a 3SLS approach to analyze a panel of 20 high-income OECD countries and find strong evidence for the existence of both effects. These results carry general and specific implications. In general, ignoring indirect effects operating through government size may mask the real net effects of volatility on growth, which could result in misleading conclusions. Specific to wage volatility, our results suggest that the net effect on economic growth depends on both government size and the wage premium from working in the private sector. Within our sample, we find evidence for both – countries for which wage volatility is beneficial to growth and others for which it is detrimental.Ítem Trade openness and bigger governments: The role of country size revisited(Elsevier, 2015-03) Jetter, Michael; Parmeterb, Christopher F.; Universidad EAFIT, Medellín, Colombia; Department of Economics, University of Miami, United States; Escuela de Economía y Finanzas; Economía; Estudios en Economía y EmpresaThis paper revisits the question of why more open countries tend to have bigger governments. We replicate successfully the main results of Ram (2009), who rejects the role of country size as an omitted variable. However, several extensions advise against a hasty conclusion: The results differ substantially depending on the data source used, the timeframe considered, the countries selected, and the way variables are measured. Specifically, we employ newer versions of the Penn World Table (PWT 7.1 and 8.0), allowing us to both extend the number of observations and the timeframe. We find evidence for the claim that smaller countries do indeed have bigger governments, especially when using the PWT 8.0 data, and Ram (2009) findings might be driven by the specific dataset used (PWT 6.1) and the countries included in that sample. Finally, we also conduct quantile regression analyses to pin down at which point of the distribution the suggested relationships come out.Ítem Volatility and growth: Governments are key(Elsevier, 2014-12) Jetter, Michael; Department of Economics, School of Economics and Finance, Universidad EAFIT, Carrera 49 7 Sur-50, Avenida Las Vegas, Medellín, Colombia, IZA, Bonn, Germany; Escuela de Economía y Finanzas; Economía; Estudios en Economía y EmpresaThere exists a persistent disagreement in the literature over the effect of business cycles on economic growth. This paper offers a solution to this disagreement, suggesting that volatility carries not only a positive direct effect, but also a negative indirect effect, operating through the insurance mechanism of government size. Theoretically, the net growth effect of volatility is then ambiguous. The paper reveals the underlying endogeneity of government size in a balanced panel of 90 countries from 1961 to 2010. In practice, the negative indirect channel dominates in democracies, but with less power to choose public services in autocratic regimes the positive direct effect takes over. Consequently, volatile growth rates are detrimental to growth in democracies, but beneficial to growth in autocracies. The empirical results suggest that a one standard deviation increase of volatility lowers growth by up to 0.52 percentage points in a democracy, but raises growth by 1.66 percentage points in a total autocracy. These findings point to a crucial intermediating role of governments in the relationship between volatility and growth. Both the size of the public sector and the regime form assume key roles