On the Level of Persistence in Government Size: Time-Series Evidence and Implications for the US

Abstract

For most developed countries, the study of the long-term trend of government size has become a major issue. This study employs advanced time-series techniques to investigate the long-run properties of the government size series for the US. By applying the persistence measures developed by Campbell and Mankiw (Quarterly Journal of Economics, 102, 857-80, 1987) and Cochrane (Journal of Political Economy, 96, 893-920, 1988), this study finds big long-term persistence in government size at all levels of the US government. The finding, indeed, explains the fact that the US has gradually taken steps to control the size of government in the 1990s.