Determinants of Government Size: An Empirical Analysis

Abstract

The purpose of the study is to identify various political, economic and demographic factors that will set out the differences in the size of government across countries. In this study, the effect of political, economic and demographic factors on government size will be analyzed by using panel data analysis method by using 1990-2015 data of the 81 countries included in the World Bank Database. In order to measure the size of government, namely, the dependent variable is government final consumption expenditure as a share of the gross domestic product. Our main findings are as follows. Between political polarization, income inequality, population density, per capita gross domestic product growth, the countries' federal structure and the size of government have a meaningful and negative relationship while democracy, fractionalization, religious fractionalization and the size of government have a significant and positive relationship.

Keywords

• Government Size
• Political Polarization
• Panel Data