Government size, institutions, and export performance among OECD economies

Bournakis, Ioannis and Tsoukis, Christopher (2013) Government size, institutions, and export performance among OECD economies. Working Paper. Middlesex University.

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We investigate the effect of the size of government, captured by the tax revenue as a share of GDP, and institutional features on countries’ export performance (export shares in international markets). Theoretically, we show in a model of endogenous extent of domestically-produced goods that there exists a well-defined government size that optimally promotes exports. Empirically, we show in a panel of 18countries for 1980-2005 that the tax-GDP ratio is significant and exerts a non-linear effect on export performance, showing that there indeed exists an optimal size of government, which we estimate at around 40%. Product market rigidities are also shown to affect negatively export performance via a negative effect on R&D. Among traditional variables, relative unit labour cost and R&D shares in GDP show up significantly and with the expected signs.

Item Type: Monograph (Working Paper)
Additional Information: This paper will be submitted to 45th Annual Conference of the Money, Macro and Finance Research Group
Research Areas: A. > Business School > Economics
Item ID: 10687
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Depositing User: Ioannis Bournakis
Date Deposited: 17 Jun 2013 06:36
Last Modified: 02 Apr 2019 18:33

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