We revisit the empirical relationship between output volatility and government expenditure in a model where the two are jointly deter- mined. The key regressors in our model are trade and ¯nancial integra- tion indicators, institutional variables, including central bank indepen- dence, and a measure of de facto exchange rate °exibility. Our ¯ndings consistently signal that government discretion has destabilising e®ects on growth volatility. We con¯rm that government size increases with trade integration, but this has adverse e®ects because public spending is positively related to growth volatility. Institutions that increase policy- makers accountability limit the level of public expenditure and volatility. In this regard, our results support the view that stronger institutions increase policy efficiency.
|Citazione:||Carmignani, F., Colombo, E., & Tirelli, P. (2007). Public expenditure and growth volatility: do "globalisation" and institutions matter? [Working paper del dipartimento].|
|Titolo:||Public expenditure and growth volatility: do "globalisation" and institutions matter?|
|Autori:||Carmignani, F; Colombo, E; Tirelli, P|
|Carattere della pubblicazione:||Scientifica|
|DCMI:||Working paper del dipartimento|
|Data di pubblicazione:||2007|
|Appare nelle tipologie:||99 - Altro|