Crises and government: Some empirical evidence

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

Governments often intervene in markets and implement policies intended to halt or mitigate crises. Recent interventions include the UK’s 2008 bank rescue package, the 2009 American Recovery and Reinvestment Act, and the European Union’s 2008 Stimulus Plan. The chapter estimates the relationship between crises and changes in the size and scope of government over both five-year and ten-year horizons. Endogeneity may also arise from the simultaneity of government size/scope and other dimensions of institutional quality. Currency crises are associated with increases in the size of government over the five-year horizon, but a larger increase over the ten-year horizon. Higgs argues that crises weaken beliefs in the efficacy of markets, opening the opportunity for government to increase its expenditures and expand its interventions. Recent interventions include the UK’s 2008 bank rescue package, the 2009 American Recovery and Reinvestment Act (ARRA), and the European Union’s 2008 Stimulus Plan.

Original languageEnglish
Title of host publicationEconomic Freedom and Prosperity
Subtitle of host publicationThe Origins and Maintenance of Liberalization
PublisherTaylor and Francis
Pages131-153
Number of pages23
ISBN (Electronic)9780429813214
ISBN (Print)9781138335394
DOIs
StatePublished - Jan 1 2018

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    Pavlik, J. B., & Young, A. T. (2018). Crises and government: Some empirical evidence. In Economic Freedom and Prosperity: The Origins and Maintenance of Liberalization (pp. 131-153). Taylor and Francis. https://doi.org/10.4324/9780429443817