The Test of Leviathan Hypothesis for the Selected Developing Countries

اقتصاد و توسعه منطقه ای

Article 3, Volume 21, Issue 8, February 2015   

Document Type: مقالات پژوهشی

DOI: 10.22067/erd.v21i8.43875

Authors

Mohammad Alizadeh^* ; Abolghasem Golkhandan

Abstract

Abstract
In this context, this article tries to presents a conceptual model of the factors affecting the government size and empirical test through econometric generalized methods of moments (GMM) by using data from 15 developing countries, review relationship between fiscal decentralization and the government size. The results of dynamic panel data indicate a positive effect of income and expenses fiscal decentralization and meaningless effect of vertical imbalance on the government size and therefore cannot approve the Leviathan hypothesis for the countries studied. Other results of this study indicate a positive and significant influence on the government size of GDP per capita (confirmed the Wagner’s low), the degree of openness of the economy (confirmed the Rodrik hypothesis) and democracy net and it negative influence of degree of urbanization.

Keywords: Fiscal Decentralization, Government Size, Developing Countries, Leviathan Hypothesis, Generalized Method of Moments (GMM).

JELClassification: C23, H5, H7.

Keywords

Fiscal Decentralization; Government size; developing countries; Leviathan Hypothesis; Generalized Method of Moments (GMM

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