The aim of this paper is to discuss the substance of macroeconomic aggregates that are commonly used in empirical research to express the size of government. Although public sector aggregates normally provide a basis for the assessment of the size of government, there are broader aggregates that capture the scope of government more realistically. This paper presents the relevant statistical concepts, the current state of methodology, as well as discusses the degree of instability in existing methodology and its effect on the robustness of empirical research findings and recommendations. In addition, this paper, on the basis of currently available data, demonstrates the extent of the differences between these statistical concepts in terms of monetary values as well as numbers of employees. The results not only show that the size of government is much larger than estimated, but that it can also have far-reaching consequences for both economic policy and economic research.
Authors: Václav Rybáček
Keywords: size of government, public sector, national accounts, total revenues, total expenditures
Volume: 11
Issue: 2