Openness, country size, and government size. Ram (2009) questions the body of influential research that suggests that
Question:
Openness, country size, and government size. Ram (2009) questions the body of influential research that suggests that there is a negative association between country size (as measured by logarithm of population) and government size (as proxied by government consumption as percent of GDP). Also, between country size and trade openness (as measured by the sum of imports and exports as percent of GDP). Ram uses a 41-year panel data (1960-2000) for over 150 countries from the Penn World Tables 6.1 . The pooled OLS results support the foregoing scenario, whereas the two-way fixed-effects results find little evidence of a negative association of country size with either government size or trade openness. You are asked to replicate Tables 1, 2, and 3 of Ram (2009; pp. 215-216). Also, test for the significance of time and country dummies.
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