States as Providers of Public Goods: How Does Government Size Affect Environmental Quality?

33 Pages Posted: 11 May 2006

See all articles by Thomas Bernauer

Thomas Bernauer

ETH Zurich

Vally Koubi

University of Bern - Department of Economics

Date Written: May 2006

Abstract

Theories explaining government size and its consequences are of two varieties. The first portrays government as a provider of public goods and a corrector of externalities. The second includes theories on bureaucracy and interest groups. One key difference is that an expansion in government size is unambiguously associated with an increase in social welfare only in theories of the former variety. As to the latter variety, the association between government size and public goods provision (or social welfare) is either negative or ambiguous. We study the empirical significance of these competing claims by examining the relationship between government size and environmental quality (notably, air quality measured by SO2 concentrations) for 42 countries over the period 1971-96. We find that the relationship is negative. This result does not prove conclusively that government size expansion has been driven by factors other than concern for the public good. But it supports a presumption against the theory of government size that emphasizes public good provision.

Keywords: Government size, public expenditure, public goods, corruption, environmental quality

Suggested Citation

Bernauer, Thomas and Koubi, Vally, States as Providers of Public Goods: How Does Government Size Affect Environmental Quality? (May 2006). Available at SSRN: https://ssrn.com/abstract=900487 or http://dx.doi.org/10.2139/ssrn.900487

Thomas Bernauer (Contact Author)

ETH Zurich ( email )

Center for Comparative and International Studies
Building IFW, office 45.1, Haldeneggsteig 4
Zurich 8092, 8092
Switzerland
+41 44 632 6466 (Phone)
+41 44 632 1289 (Fax)

HOME PAGE: http://www.ib.ethz.ch

Vally Koubi

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, CH-3001
Switzerland

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