The size of the Brazilian government: concepts and measures

Abstract

The purpose of this paper is to build a measure of government size for Brazil in terms of state-owned companies. We build the government size considering the federal government's current expenditure (international measure) and the state-owned company's current expenditure. Our measure shows that the government size between 1980 and 2005 was around 20% of the GDP. Additionally, we investigate the relationship of this measure and the number of coalition parties. We use non-conditional correlated because we did not have a higher number of observations (Greene, 2000). Our results show that there is a high correlation between the reduction in the expenditure of the state-owned companies and the growth of the expenditure of the central government (that explains the maintenance of the government size). Moreover, there is a high correlation between the expenditure and the increase of the political space in federal government (measured by the number of parties that participate of the government coalition). Our theoretical references between government size and the number of coalition parties can be found in the works of Volkerink and de Haan (2001), Perotti and Kontopoulos (2002), Persson and Tabellini (2003), and Amorim and Borsani (2004).

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