Does Globalization Restrict Budgetary Autonomy? A Multidimensional Approach

25 Pages Posted: 23 May 2003

See all articles by Friedrich Heinemann

Friedrich Heinemann

ZEW – Leibniz Centre for European Economic Research; University of Heidelberg - Alfred Weber Institute for Economics

Date Written: June 1999

Abstract

Does globalization restrict the leeway for national budgetary policy? With the help of cluster and discriminant analysis this study provides evidence on the basis of the experience of OECD countries since the 1970s. Four budgetary dimensions are included in the analysis: tax structure, expenditure structure, public debt and budget size. Globalization as a potential driving force for changes in government finance is identified in form of variables on the existence of capital and current account restrictions, on the exposure to international trade and the exchange rate regime. The results suggest that globalization does indeed matter for government budgets. However, substantial room for an individual national policy particularly in regard to expenditure structure and public debt is left.

Keywords: Fiscal Policy, Tax Competition, Globalization, Cluster Analysis, Discriminant Analysis

JEL Classification: H60, H87

Suggested Citation

Heinemann, Friedrich, Does Globalization Restrict Budgetary Autonomy? A Multidimensional Approach (June 1999). ZEW Discussion Paper No. 99-29. Available at SSRN: https://ssrn.com/abstract=380221 or http://dx.doi.org/10.2139/ssrn.380221

Friedrich Heinemann (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

HOME PAGE: http://www.zew.de

University of Heidelberg - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

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