Government size, unemployment and inflation nexus in Eight large emerging market economies

• António Afonso ^[1] ; Hüseyin Şen ^[2] ; Ayşe Kaya ^[3]
  1. [1] Universidade de Lisboa

     Universidade de Lisboa

     Socorro, Portugal

     
  2. [2] Ankara Yıldırım Beyazıt University, Turquía
  3. [3] İzmir Kâtip Çelebi University, Turquía

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• Localización: Hacienda Pública Española / Review of Public Economics, ISSN 0210-1173, Nº 236, 2021, págs. 133-170
• Idioma: inglés
• Títulos paralelos:
  • Tamaño del gobierno, nexo entre desempleo e inflación en Ocho grandes economías de mercados emergentes
• Enlaces
  • Texto completo
• Resumen
  • español

    Utilizando datos anuales de un panel de ocho grandes economías de mercado emergentes, para el periodo 1980-2015, analizamos los vínculos de causalidad subyacentes entre el tamaño del gobierno, el desempleo y la inflación utilizando técnicas de cointegración. En general, los resultados muestran que existe una relación de causalidad unidireccional entre el tamaño del sector público y los niveles de desempleo e inflación. Los resultados difieren en función de la definición de sector público y del indicador utilizado para su medición. Para el indicador de consumo público respecto al PIB la causalidad es unidireccional, donde el tamaño del sector público explica el desempleo y la inflación. Además, los impuestos indirectos muestran una importante asociación causal positiva con el desempleo, mientras que los impuestos directos guardan una estrecha relación con la inflación en la muestra de todos los países.

  • English

    Using annual data for a panel of eight large emerging market economies from 1980 to 2015, we uncover the underlying linkages between government size, unemployment, and inflation by using the panel cointegration and causality frameworks. Overall, our empirical results show that there exists a unidirectional causality running from government size to both unemployment and inflation. The results also tell that the impact of government size on unemployment and inflation varies with how government size is defined or measured. In the case of the ratio of government consumption spending to GDP is chosen as the proxy measure of government size, the causality is one-way and runs from government size to both unemployment and inflation. In addition, indirect taxes are in a significant positive causal association with unemployment, while direct taxes are in a close connection with inflation in the full-country sample.

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