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Public Choice

, Volume 154, Issue 3–4, pp 173–195 | Cite as

Trade openness and public expenditure. The Spanish case, 1960–2000

  • Estela SáenzEmail author
  • Marcela Sabaté
  • M. Dolores Gadea
Article

Abstract

The empirical link between the post-WWII expansion of international market integration and the growth of national public expenditure has been widely noted, with no consensus as yet regarding the interpretation of this correlation. We posit that a likely link between increased openness and public spending is the use of the latter to offset changes in the distribution of income that result from increased openness. To explore this potential link, we study time series data from Spain in 1960–2000, a period of major changes in political organization as well as in both fiscal and trade policy. We find evidence that democracy reinforced the causal relation from increased openness to greater public expenditure. Thus, the paper contributes to the literature that emphasizes that changes in political regimes are potentially important determinants of the observed international patterns of openness and government size.

Keywords

Trade openness Public expenditure Democracy Cointegration Structural breaks 

JEL Classification

F41 H11 

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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  • Estela Sáenz
    • 1
    Email author
  • Marcela Sabaté
    • 2
  • M. Dolores Gadea
    • 2
  1. 1.Department of Applied Economics, School of Business and Public ManagementUniversity of ZaragozaHuescaSpain
  2. 2.Department of Applied Economics, School of Economics and BusinessUniversity of ZaragozaZaragozaSpain

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