Impact of trade openness on public expenditure in the long run. Spain, 1960-2000

• Autores: María Dolores Gadea Rivas, Marcela Sabaté Sort, Estela Sáenz Rodríguez
• Localización: XVII Encuentro de Economía Pública: políticas públicas ante la crisis, 2010, pág. 5
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • Recently, greater attention has been paid to the possible relation between trade openness and public expenditure. Most of the articles of this kind of literature are based on the central argument of the work of Rodrik (1998): more open economies are exposed to a greater risk as a result of the possible turbulences in the international markets, which can affect their domestic economy. The public sector can exert an isolation function over this external risk, increasing its participation in the whole economy. Today, this is a controversial and open subject, in spite of the many empirical studies carried out.

    The aim of this paper is to empirically determine whether there is a relation between trade openness and public expenditure in Spain in the period 1960-2000, a relatively short period that has witnessed an accelerated process both of openness to the international markets of goods and services and of public sector growth. The time series analysis for the Spanish economy in the period 1960-2000, based on the cointegration test of Johansen, reveals a long-term relationship between public expenditure and both trade openness and several protection indicators. We complete our analysis with several econometric techniques which reveal that the aforementioned relation is both robust and stable.