Selection and Assortment of the Variables Describing the Relationship between the Economy and the General Government Sector Size by Application of the LEM2 Algorithm
This paper reverses the relatively frequent examined interrelation that links an impact of the public sector (and within it the general government sector) on the economy of the analyzed countries. The article analyses whether the size of the general government sector is a function of the economy expressed through variables that were adopted for research. Realization of the research objective that was raised in this article focused on typing, grouping and selecting variables that describe respectively: the economy and the size of the sector. For identifying relationships between variables assigned to each group, the LEM2 algorithm was used. Rules that were generated by the application of this algorithm provided not only information about the relationships of individual variables, but also provided an indication of how frequently they occurred in relation to the examined pairs of variables describing the economy and the size of the general government sector. The subject of research was EU Member States (their economy and public finance systems) and the research period was set on the years 2000 to 2013 (inclusive). Among the economic variables and variables describing the size of the sector, there were included both standard variables used in the analyzes dedicated to macroeconomic issues as well as variables that the authors' team selected in order to test their applicability in describing the economy and the size of the general government sector. Such a composition of the variables is well-founded as, besides the main objective of this article (i.e. to establish a link between the economic situation and size of the general government sector) the additional effect of research, and that is the optimization of the selected variables that are used to explain the relationship of the economy and the size of the sector. (original abstract)
- Alesina, A., Ardagna, S. (2009). Large Changes in Fiscal Policy: Taxes Versus Spending. NBER Working Paper, No. 15438, 1-37.
- Alesina, A., Perroffi, R. (1995). The Political Economy of Budget Deficits. IMF Staff Papers, 24, 1- 32.
- Alesina, A., Wacziarg, R. (1998). Openness, Country Size and Government. Journal of Public Economics, No 69, 305-321.
- Anwar, S. (2005). Specialisation-based External Economies, Supply of Primary Factors and Government Size. Journal of Economics and Business, 57(3), 259-271.
- Baumol, W.J. (1965). Welfare Economics and the Theory of the State. London: G. Bell & Sons.
- Baumol, W.J., (1967). Macroeconomics of Unbalanced Growth: the Anatomy of Urban Crisis. American Economic Review, Vol. 57(3), 415-426.
- Berry, W.D., Lowery, D. (1984). The Growing Cost of Government: A Test of Two Explanations. Social Science Quarterly, Vol. 65, 734-749.
- Berry, W.D., Lowery, D. (1987). Explaining the Size of the Public Sector: Responsive and Excessive Government Interpretations. The Journal of Politics, 49(2), 400-420.
- Boix, C. (2001). Democracy, development, and the public sector. American Journal of Political Science, Vol. 45, No. 1, 1-17.
- Borcherding, T.E., Ferris, J.S., Garzoni, A. (2003). Growth in the Real Size of Government since 1970. In R.E. Wagner, J.G. Backhaus (Eds.), The Kluwer Handbook of Public Finance. Hingham: Kluwer Academic Press.
- Brennan, G., Buchanan, J.M. (1980). The Power to Tax. Cambridge: Cambridge University Press.
- Buchanan, J.M. (1980). Rent Seeking and Profit Seeking. In J.M. Buchanan, R.D. Tollison, G. Tullock (Eds.), Toward a Theory of the Rent-Seeking Society (pp. 3-15). Texas: Texas A&M University Press, College Station.
- Chang, T. (2002). An Econometric Test of Wager's Law for Six Countries Based on Cointegration and Error- Correction Modelling Techniques. Applied Economics, Vol. 34, 1157-1169.
- Chletsos, M., Kollias, C. (1997). Testing Wagner's Law Using Disaggregated Public Expenditure Data in the Case of Greece: 1958-93. Applied Economics, Vol. 29, 371-377.
- Chobanov, D., Mladenova, A. (2009). What Is the Optimum Size of Government. Institute for Market Economics, Bulgaria, 1-47.
- Cios, K.J., Pedrycz, W., Świnarski, R.W. (1999). Data Mining Methods for Knowledge Discovery. Dordrecht: Kluwer.
- Downs, A. (1967). Inside Bureaucracy. Boston: Little Brown.
- Fayyad, U.M., Piatetsky-Shapiro, G., Smyth, P. (1996). From Data Mining to Knowledge Discovery in Databases. AI Magazine, Volume 17, Number 3, 1-54.
- Epifani, P., Gancia, G. (2009). Openness, Government Size and the Terms of Trade. Review of Economics Studies, Vol. 76(2), 629-668.
- Ferris, J.S., West, E.G. (1996). The Cost Disease and Government Growth: Qualifications to Baumol. Public Choice, Vol. 89, 35-52.
- Fryc, B., Pancerz, K., Suraj, Z. (2004). Approximate Petri Nets for Rule-Based Decision Making. In Proceedings of Rough Sets and Current Trends in Computing: 4th International Conference, RSCTC 2004, Uppsala, Sweden, June 1-5, 2004, pp. 733-742. Volume 3066 of Lecture Notes in Computer.
- Garen, J., Trask, K. (2005). Do More Open Countries Have Bigger Governments? Another Look. Journal of Development Economics, 77, 533-551.
- Garrett, G. (2001). Globalization and Government Spending around the World. Studies in Comparative International Development, No 35, 3-29.
- Gemmell, N. (1993). The Wagner's Law and Musgrave's Hypotheses. In: N. Gemmell (Ed.), The Growth of the Public Sector - Theories and International Evidences (pp. 103- 120). Cheltenham: Edward Elgar,.
- Gramc, B. (2007). Factors of the Size of Government in Developed Countries. Prague Economic Papers, No 2, 130-142.
- Grzymala-Busse, J.W. (1992). LERS-A System for Learning from Examples Based on Rough Sets. [In:] R. Slowinski (Ed.), Intelligent Decision Support. Handbook of Applications and Advances of the Rough Set Theory (pp. 3-18). Dordrecht, Boston, London: Kluwer Academic Publishers.
- Henrekson, M. (1993). Wagner's Law - A Spurious Relationship? Public Finance, Vol. 48 (3), 406- 415.
- Holsey, C., Borcherding, T. (1997). Why does Government's Share of National Income Grow. In: D. Muller (Ed.), Perspectives on public choice (pp. 569-590). New York: CUP.
- Hosley, Ch.M., Borcherding, T.E. (1997). Why does Government's Share of National Income Grow? An Assessment of the Recent Literature on the US. Perspectives on public choice: A handbook, pp. 562-589.
- Islam, A. (2001). Wagner's Law Revisited: Cointegration and Exogeneity. Test for the USA. Applied Economics Letters, Vol. 8, 509-515.
- Islam M.Q., (2004), "The Long Run Relationship between Openness and Government Size: Evidence from Bounds Test", Applied Economics, No 36, pp. 995-1000.
- Iyare, S., Lorde, T., (2004). Co-integration, Causality and Wagner's Law: Test for Selected Caribbean Countries. Applied Economics Letters, Vol. 11, 815-825.
- Kau, J.B., Rubin, P.H. (2002). The Growth of Government: Sources and Limits. Public Choice, 113(3-4), 389-402.
- Kraan, D.J. (1996). Budgetary Decisions. A Public Choice Approach. Cambridge: Cambridge University Press.
- Kustepeli, Y. (2005). The Relationship Between Government Size and Economic Growth: Evidence From a Panel Data Analysis. DokuzEylül University-Faculty of Business-Department of Economics Discussion Paper Series, No. 05/06, November- December, pp. 1-10.
- McNutt, P.A. (1996). The Economics of Public Choice. Cheltenham: Edward Elgar, Brookfield.
- Michalski, R.S. (1997). Machine Learning, Data Mining and Knowledge Discovery. Principles and Applications. In: Tutorials of Intelligent Information Systems IIS'97. Zakopane: IPI PAN Press.
- Mueller, D.C. (1997). Perspectives on Public Choice: A Handbook. Cambridge: Cambridge University Press.
- Mueller, D.C. (2003). Public Choice III. Cambridge: Cambridge University Press.
- Niskanen, W.A. (1971). Bureaucracy and Representative Government. Chicago: Aldine-Atherton, Chicago.
- Oxley, L. (1994). Cointegration, Causality and Wagner's Law: a Test for Britain 1870-1913. Scottish Journal of Political Economy, Vol. 41(3), 286-298.
- Pawlak, Z. (1982). Rough Sets. Intern J Comp Inf Sci 11, 341-356.
- Payne, J.L. (1991). Elections and Government Spending. Public Choice, 70(1-2), 71-82.
- Peacock, A.T., Wiseman, J. (1961). The Growth of Public Expenditures in the United Kingdom. Princeton: Princeton University Press.
- Persson, T., Tabellini, G., (1999). Political Economics and Public Finance. Bocconi University, IGIER Working Paper, No 149, 1-131.
- Pevcin, P. (2004a). Does Optimal Size of Government Spending Exist? University of Ljubljana, No 10, 101-135.
- Pevcin, P. (2004b). Cross-country Differences in Government Sector Activities. Zbornik Radova Ekonomskog fakulteta u Rijeci, casopis za ekonomsku teoriju i praksu-Proceedings of Rijeka Faculty of Economics. Journal of Economics and Business, 22(2), 41-59.
- Quinlan, J.R. (1993). C4.5: Programs for Machine Learning. San Francisco: Morgan Kaufmann.
- Quinn, D. (1997). The Correlates of Change in International Financial Regulation. American Political Science Review, Vol. 91(3), 531-551.
- Rodrik, D. (1998). Why Do More Open Economies Have Bigger Governments? Journal of Political Economy, No 106, 997-1032.
- Rodrik, D. (2000). Institutions for high quality growth: What they are and how to acquire them. Studies in Comparative International Development, No 35(3), 3-31.
- Rowley, C.K., Tollison, R.D. (1994). Peacock and Wiseman on the Growth of Public Expenditure. Public Choice 78(2), 125-128.
- Słowiński, K., Stefanowski, J., Siwiński, D. (2002). Application of Rule Induction and Rough Sets to Verification of Magnetic Resonance Diagnosis. Fundamenta Informaticae, Volume 53, 345- 363.
- Szczuka, M., Mikołajczyk, M., Bazan, J. (2005). RSES 2.2 User's Guide. Retrieved from: http://logic.mimuw.edu.pl/rses.
- Thornton, R. (1999). Cointegration, Causality and Wagner's Law in 19th Century Europe. Applied Economics Letters, Vol. 6, 413-416.
- Tullock, G. (1980). Efficient Rent Seeking. In: J.M. Buchanan, R.D. Tollison, G. Tullock, (Eds.), Towards a Theory of Rent Seeking Society (pp. 14-34). Texas: Texas A&M University Press, College Station.