Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/68841
Authors: 
Erauskin, Iñaki
Year of Publication: 
2013
Series/Report no.: 
Economics Discussion Papers 2013-7
Abstract: 
This paper studies the impact of financial openness on the size of government, and other key economic variables, such as the consumption-wealth ratio, the growth rate of wealth, and welfare, in a two-country world, based on a portfolio approach, assuming that public spending is utility-enhancing. The model suggests that the size of government, the consumption-wealth ratio, and welfare should be higher in an open economy due to a higher productivity and/or less volatility through risk sharing. The theoretical results for the growth rate depend on differences on productivities and consumption-wealth ratios. The empirical evidence based on a sample of 50 countries for the period 1970-2009 broadly supports the main theoretical results of the model, even though the inclusion of Singapore distorts sometimes the broad picture.
Subjects: 
Financial openness
productivity
volatility
consumption-wealth ratio
growth
welfare
size of government
JEL: 
F41
F43
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Working Paper

Files in This Item:
File
Size
465.69 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.