1. bookVolume 12 (2016): Issue 3 (October 2016)
Journal Details
License
Format
Journal
First Published
30 Mar 2015
Publication timeframe
4 times per year
Languages
English
access type Open Access

Selection and Assortment of The Variables Describing The Relationship between The Economy and The General Government Sector Size by Application of The LEM2 Algorithm

Published Online: 09 Feb 2017
Page range: 69 - 84
Received: 20 Aug 2015
Accepted: 16 Dec 2016
Journal Details
License
Format
Journal
First Published
30 Mar 2015
Publication timeframe
4 times per year
Languages
English

This paper reverses the relatively frequent examined interrelation that links an impact of the public sector (and within it the general government sector) on the economy of the analyzed countries. The article analyses whether the size of the general government sector is a function of the economy expressed through variables that were adopted for research. Realization of the research objective that was raised in this article focused on typing, grouping and selecting variables that describe respectively: the economy and the size of the sector. For identifying relationships between variables assigned to each group, the LEM2 algorithm was used. Rules that were generated by the application of this algorithm provided not only information about the relationships of individual variables, but also provided an indication of how frequently they occurred in relation to the examined pairs of variables describing the economy and the size of the general government sector. The subject of research was EU Member States (their economy and public finance systems) and the research period was set on the years 2000 to 2013 (inclusive). Among the economic variables and variables describing the size of the sector, there were included both standard variables used in the analyzes dedicated to macroeconomic issues as well as variables that the authors’ team selected in order to test their applicability in describing the economy and the size of the general government sector. Such a composition of the variables is well-founded as, besides the main objective of this article (i.e. to establish a link between the economic situation and size of the general government sector) the additional effect of research, and that is the optimization of the selected variables that are used to explain the relationship of the economy and the size of the sector.

Keywords

Alesina, A., Ardagna, S. (2009). Large Changes in Fiscal Policy: Taxes Versus Spending. NBER Working Paper, No. 15438, 1-37.Search in Google Scholar

Alesina, A., Perrotti, R. (1995). The Political Economy of Budget Deficits. IMF Staff Papers, 24, 1-32.Search in Google Scholar

Alesina, A., Wacziarg, R. (1998). Openness, Country Size and Government. Journal of Public Economics, No 69, 305-321.Search in Google Scholar

Anwar, S. (2005). Specialisation-based External Economies, Supply of Primary Factors and Government Size. Journal of Economics and Business, 57(3), 259-271.Search in Google Scholar

Baumol, W.J. (1965). Welfare Economics and the Theory of the State. London: G. Bell & Sons.Search in Google Scholar

Baumol, W.J., (1967). Macroeconomics of Unbalanced Growth: the Anatomy of Urban Crisis. American Economic Review, Vol. 57(3), 415-426.Search in Google Scholar

Berry, W.D., Lowery, D. (1984). The Growing Cost of Government: A Test of Two Explanations. Social Science Quarterly, Vol. 65, 734-749.Search in Google Scholar

Berry, W.D., Lowery, D. (1987). Explaining the Size of the Public Sector: Responsive and Excessive Government Interpretations. The Journal of Politics, 49(2), 400-420.Search in Google Scholar

Boix, C. (2001). Democracy, development, and the public sector. American Journal of Political Science, Vol. 45, No. 1, 1-17.Search in Google Scholar

Borcherding, T.E., Ferris, J.S., Garzoni, A. (2003). Growth in the Real Size of Government since 1970. In R.E. Wagner, J.G. Backhaus (Eds.), The Kluwer Handbook of Public Finance. Hingham: Kluwer Academic Press.Search in Google Scholar

Brennan, G., Buchanan, J.M. (1980). The Power to Tax. Cambridge: Cambridge University Press.Search in Google Scholar

Buchanan, J.M. (1980). Rent Seeking and Profit Seeking. In J.M. Buchanan, R.D. Tollison, G. Tullock (Eds.), Toward a Theory of the Rent-Seeking Society (pp. 3-15). Texas: Texas A&M University Press, College Station.Search in Google Scholar

Chang, T. (2002). An Econometric Test of Wager’s Law for Six Countries Based on Cointegration and Error-Correction Modelling Techniques. Applied Economics, Vol. 34, 1157-1169.Search in Google Scholar

Chletsos, M., Kollias, C. (1997). Testing Wagner’s Law Using Disaggregated Public Expenditure Data in the Case of Greece: 1958-93. Applied Economics, Vol. 29, 371-377.Search in Google Scholar

Chobanov, D., Mladenova, A. (2009). What Is the Optimum Size of Government. Institute for Market Economics, Bulgaria, 1-47.Search in Google Scholar

Cios, K.J., Pedrycz, W., Świnarski, R.W. (1999). Data Mining Methods for Knowledge Discovery. Dordrecht: Kluwer.Search in Google Scholar

Downs, A. (1967). Inside Bureaucracy. Boston: Little Brown.Search in Google Scholar

Fayyad, U.M., Piatetsky-Shapiro, G., Smyth, P. (1996). From Data Mining to Knowledge Discovery in Databases. AI Magazine, Volume 17, Number 3, 1-54.Search in Google Scholar

Epifani, P., Gancia, G. (2009). Openness, Government Size and the Terms of Trade. Review of Economics Studies, Vol. 76(2), 629-668.Search in Google Scholar

Ferris, J.S., West, E.G. (1996). The Cost Disease and Government Growth: Qualifications to Baumol. Public Choice, Vol. 89, 35-52.Search in Google Scholar

Fryc, B., Pancerz, K., Suraj, Z. (2004). Approximate Petri Nets for Rule-Based Decision Making. In Proceedings of Rough Sets and Current Trends in Computing: 4th International Conference, RSCTC 2004, Uppsala, Sweden, June 1-5, 2004, pp. 733-742. Volume 3066 of Lecture Notes in Computer.Search in Google Scholar

Garen, J., Trask, K. (2005). Do More Open Countries Have Bigger Governments? Another Look. Journal of Development Economics, 77, 533-551.Search in Google Scholar

Garrett, G. (2001). Globalization and Government Spending around the World. Studies in Comparative International Development, No 35, 3-29.Search in Google Scholar

Gemmell, N. (1993). The Wagner’s Law and Musgrave’s Hypotheses. In: N. Gemmell (Ed.), The Growth of the Public Sector - Theories and International Evidences (pp. 103-120). Cheltenham: Edward Elgar,.Search in Google Scholar

Gramc, B. (2007). Factors of the Size of Government in Developed Countries. Prague Economic Papers, No 2, 130-142.Search in Google Scholar

Grzymala-Busse, J.W. (1992). LERS-A System for Learning from Examples Based on Rough Sets. [In:] R. Slowinski (Ed.), Intelligent Decision Support. Handbook of Applications and Advances of the Rough Set Theory (pp. 3-18). Dordrecht, Boston, London: Kluwer Academic Publishers.Search in Google Scholar

Henrekson, M. (1993). Wagner’s Law - A Spurious Relationship? Public Finance, Vol. 48 (3), 406- 415.Search in Google Scholar

Holsey, C., Borcherding, T. (1997). Why does Government’s Share of National Income Grow. In: D. Muller (Ed.), Perspectives on public choice (pp. 569-590). New York: CUP.Search in Google Scholar

Hosley, Ch.M., Borcherding, T.E. (1997). Why does Government’s Share of National Income Grow? An Assessment of the Recent Literature on the US. Perspectives on public choice: A handbook, pp. 562-589.Search in Google Scholar

Islam, A. (2001). Wagner’s Law Revisited: Cointegration and Exogeneity. Test for the USA. Applied Economics Letters, Vol. 8, 509-515.Search in Google Scholar

Islam M.Q., (2004), “The Long Run Relationship between Openness and Government Size: Evidence from Bounds Test”, Applied Economics, No 36, pp. 995-1000.Search in Google Scholar

Iyare, S., Lorde, T., (2004). Co-integration, Causality and Wagner’s Law: Test for Selected Caribbean Countries. Applied Economics Letters, Vol. 11, 815-825.Search in Google Scholar

Kau, J.B., Rubin, P.H. (2002). The Growth of Government: Sources and Limits. Public Choice, 113(3-4), 389-402.Search in Google Scholar

Kraan, D.J. (1996). Budgetary Decisions. A Public Choice Approach. Cambridge: Cambridge University Press.Search in Google Scholar

Kustepeli, Y. (2005). The Relationship Between Government Size and Economic Growth: Evidence From a Panel Data Analysis. DokuzEylül University-Faculty of Business-Department of Economics Discussion Paper Series, No. 05/06, November-December, pp. 1-10.Search in Google Scholar

McNutt, P.A. (1996). The Economics of Public Choice. Cheltenham: Edward Elgar, Brookfield.Search in Google Scholar

Michalski, R.S. (1997). Machine Learning, Data Mining and Knowledge Discovery. Principles and Applications. In: Tutorials of Intelligent Information Systems IIS’97. Zakopane: IPI PAN Press.Search in Google Scholar

Mueller, D.C. (1997). Perspectives on Public Choice: A Handbook. Cambridge: Cambridge University Press.Search in Google Scholar

Mueller, D.C. (2003). Public Choice III. Cambridge: Cambridge University Press.Search in Google Scholar

Niskanen, W.A. (1971). Bureaucracy and Representative Government. Chicago: Aldine-Atherton, Chicago.Search in Google Scholar

Oxley, L. (1994). Cointegration, Causality and Wagner’s Law: a Test for Britain 1870-1913. Scottish Journal of Political Economy, Vol. 41(3), 286-298.Search in Google Scholar

Pawlak, Z. (1982). Rough Sets. Intern J Comp Inf Sci 11, 341-356.Search in Google Scholar

Payne, J.L. (1991). Elections and Government Spending. Public Choice, 70(1-2), 71-82.Search in Google Scholar

Peacock, A.T., Wiseman, J. (1961). The Growth of Public Expenditures in the United Kingdom. Princeton: Princeton University Press.Search in Google Scholar

Persson, T., Tabellini, G., (1999). Political Economics and Public Finance. Bocconi University, IGIER Working Paper, No 149, 1-131.Search in Google Scholar

Pevcin, P. (2004a). Does Optimal Size of Government Spending Exist? University of Ljubljana, No 10, 101-135.Search in Google Scholar

Pevcin, P. (2004b). Cross-country Diff erences in Government Sector Activities. Zbornik Radova Ekonomskog fakulteta u Rijeci, časopis za ekonomsku teoriju i praksu-Proceedings of Rijeka Faculty of Economics. Journal of Economics and Business, 22(2), 41-59.Search in Google Scholar

Quinlan, J.R. (1993). C4.5: Programs for Machine Learning. San Francisco: Morgan Kaufmann.Search in Google Scholar

Quinn, D. (1997). The Correlates of Change in International Financial Regulation. American Political Science Review, Vol. 91(3), 531-551.Search in Google Scholar

Rodrik, D. (1998). Why Do More Open Economies Have Bigger Governments? Journal of Political Economy, No 106, 997-1032.Search in Google Scholar

Rodrik, D. (2000). Institutions for high quality growth: What they are and how to acquire them. Studies in Comparative International Development, No 35(3), 3-31.Search in Google Scholar

Rowley, C.K., Tollison, R.D. (1994). Peacock and Wiseman on the Growth of Public Expenditure. Public Choice 78(2), 125-128.Search in Google Scholar

Słowiński, K., Stefanowski, J., Siwiński, D. (2002). Application of Rule Induction and Rough Sets to Verification of Magnetic Resonance Diagnosis. Fundamenta Informaticae, Volume 53, 345-363.Search in Google Scholar

Szczuka, M., Mikołajczyk, M., Bazan, J. (2005). RSES 2.2 User’s Guide. Retrieved from: http://logic.mimuw.edu.pl/rses.Search in Google Scholar

Thornton, R. (1999). Cointegration, Causality and Wagner’s Law in 19th Century Europe. Applied Economics Letters, Vol. 6, 413-416.Search in Google Scholar

Tullock, G. (1980). Efficient Rent Seeking. In: J.M. Buchanan, R.D. Tollison, G. Tullock, (Eds.), Towards a Theory of Rent Seeking Society (pp. 14-34). Texas: Texas A&M University Press, College Station.Search in Google Scholar

Recommended articles from Trend MD

Plan your remote conference with Sciendo