Integration and the Structure of Public Spending

Research output: Contribution to journalArticle

Abstract

he voluminous tax competition literature suggests that increased economic integration leads to reduced tax rates and suboptimal levels of government spending as countries compete for mobile factors of production. Integration may influence not only the size of the government but also the structure of public spending. Comprehensive studies analyzing the effect of integration on the overall structure of government spending are rare, however. This article fills this void by providing an empirical analysis of the effects of economic integration on the overall structure of public spending in a number of Organisation for Economic Co-operation and Development countries using panel data on the different government spending components for the period 1970 to 2002. The authors find that integration negatively influences government consumption and investment but that there is no empirical evidence that transfers are positively or negatively affected by integration, as suggested by the compensation and efficiency views, respectively.

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Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics

Keywords

  • economic integration, the structure of public spending, tax competition
Original languageEnglish
Pages (from-to)1001-1027
JournalComparative Political Studies
Volume41
Issue number7
Publication statusPublished - 2008
Publication categoryResearch
Peer-reviewedYes