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Studying the role of political competition in the evolution of government size over long horizons

  • Economics
  • Political Science


We argue for the use of cointegration and error correction analysis as a method to combine economic factors that are nonstationary with political factors that are stationary into a dynamic, empirical model of the evolution of public policy over long periods. The approach we develop is applied to disentangle the contributions of economics and politics to the evolution of public expenditure by the Government of Canada over 130 years, from the origin of the modern state to the end of the 20th century. Political competition emerges robustly as the primary political factor affecting government size in the long run as well as over shorter horizons.

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