SavedAdd your journal

Journals / Business and Economics Research Journal / 2019 / Cilt: 10 - Sayı: 4

The Impact of Government Size on Output Volatility: Evidence from World Economies

GAMZE ÖZ YALAMAN
DENİZ SEVİNÇ
GÜVEN SEVİL
Pages
761–776
DOI
—
🏛️Bibliographic metadata and full text access for this article are provided via DergiPark.
DergiPark Record ↗
✨

AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

Moreover, confirming Keynesian Hypothesis, the results show that there is mostly one-way causality from government size to output volatility.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:One of the most important goals of policy-makers is to achieve macroeconomic stability, which could significantly be affected by output volatility.
📊
Key Findings & Data:In an effort to provide insights with regard to macroeconomic stability, this study aims to model the volatility of output by using univariate GARCH models and to examine the impact of government size on output volatility by using extensive data set from eight different classifications of world economies for the period between 1960 and 2017.
💡
Conclusion & Impact:Moreover, confirming Keynesian Hypothesis, the results show that there is mostly one-way causality from government size to output volatility.
🔬Design:Modeling & Simulation
📍Scope:2017 Verileri
⚙️Variables:Domain Parameters

Özet

One of the most important goals of policy-makers is to achieve macroeconomic stability, which could significantly be affected by output volatility. In an effort to provide insights with regard to macroeconomic stability, this study aims to model the volatility of output by using univariate GARCH models and to examine the impact of government size on output volatility by using extensive data set from eight different classifications of world economies for the period between 1960 and 2017. The study also employs the Granger Causality Analysis to determine the direction of this relationship. The results provide strong evidence for a negative relation between government size and output volatility. Output volatility is largely dependent on its own shocks and negatively influenced by outside shock as government size. Moreover, confirming Keynesian Hypothesis, the results show that there is mostly one-way causality from government size to output volatility. The results are robust in terms of different classifications of world economies, different measurements of output volatility, different methodologies and controlling for the effect of different sets of exogenous variables.

🔖

Cite This Article

YALAMAN, G. Ö., SEVİNÇ, D., SEVİL, G. (2019). The Impact of Government Size on Output Volatility: Evidence from World Economies. Business and Economics Research Journal, Cilt: 10 - Sayı: 4, 761–776. https://ajindex.com/articles/147314

📄 Full Text PDF Viewer

📄

PDF görüntüleyici hazırlanıyor...

References (12)

  1. Al-Faris, A. F. (2002) Public expenditure and economic growth in the Gulf Cooperation Council countries. Applied Economics, 34(9), 1187-1193. https://doi.org/10.1080/00036840110090206 Andrés, J., Doménech, R., & Fatás, A. (2008). The stabilizing role of government size. Journal of Economic Dynamics and Control, 32(2), 571-593. https://doi.org/10.1016/j.jedc.2007.02.006
  2. Antonis, A., Constantinos, K., & Persefoni, T. (2013). Wagner's law versus Keynesian hypothesis: Evidence from preWWII Greece. Panoeconomicus, 60(4), 457-472. http://dx.doi.org/10.2298/PAN1304457A
  3. Bejan, M. (2006). Trade openness and output volatility. http://dx.doi.org/10.2139/ssrn.965824
  4. Bollerslev, T. (1986). Generalized autoregressive conditional heteroskedasticity. Journal of Econommetrics, 31(3), 307- 327. https://doi.org/10.1016/0304-4076(86)90063-1
  5. Bose, N., Haque, M. E. & Osborn, D. R. (2007). Public expenditure and economic growth: A disaggregated analysis for developing countries. The Manchester School, 75(5), 533-556. https://doi.org/10.1111/j.1467- 9957.2007.01028.x Çalışkan, S., Karabacak, M. and Mecik, O. (2017). The relationship between education expenditures and economic growth in turkish economy: Bootstrap Toda-Yamamoto causality test approach. KOSBED, 33, 45-56. http://dergipark.gov.tr/download/article-file/645547
  6. Carmignani, F., Colombo, E. and Tirelli, P. (2011). Macroeconomic risk and the (de) stabilising role of government size. European Journal of Political Economy, 27(4), 781-790. https://doi.org/10.1016/j.ejpoleco.2011.04.002
  7. Cecchetti, G. S., Flores-Lagunes, A. & Krause, S. (2006). Has monetary policy become more efficient? A cross‐country analysis. The Economic Journal, 116, 408-433. https://doi.org/10.1111/j.1468-0297.2006.01086.x
  8. Colombier, C. (2011). Does the composition of public expenditure affect economic growth? Evidence from the Swiss case. Applied Economics Letters, 18(16), 1583-1589. https://doi.org/10.1080/13504851.2011.554361
  9. Cooray, A. (2009).
  10. Government Expenditure, Governance and economic growth. Comparative Economic Studies, 51(3), 401-418. https://doi.org/10.1057/ces.2009.7.
  11. Debrun, X., Pisani-Ferry, J. & Sapir, A. (2008). Government size and output volatility: Should we forsake automatic stabilization? (IMF Working Paper No: 08/ 122). International Monetary Fund. https://www.imf.org/en/Publications/WP/Issues/2016/12/31/Government-Size-and-Output-Volatility-ShouldWe-Forsake-Automatic-Stabilization-21947.
  12. Denizer, C. İyigün, M., & Owen, A. L. (2002