3. Data, integrability and breaks
This section introduces the raw data and looks at their statistical properties. We start with data sources.
3. 1 Data sources and graphs
There are annual data for various types of government expenditures and taxes for Greece, which are available for different time intervals over 1960-2000. Our main data sources are the Penn World Tables (PWT), version 6.1 (see Heston et al., 2002), and the World Development Indicators (WDI) dataset. To construct the economy’s growth rate (denoted as growth in the regressions), we use real GDP per capita in constant prices (we use the PWT measure of GDP per capita; however, there are no differences if we use the WDI measure instead).
The size of government is usually measured by government spending, tax revenues and the budget balance, all expressed as shares of GDP (see e.g. Tanzi and Zee, 1997, and Persson and Tabellini, 2003). In our study, again following usual practice, by government spending we mean the share of government consumption in GDP6 (denoted as govshare and being available from PWT) and the ratio of total government expenditures over GDP7 (denoted as govexp and being available from WDI). Since govexp is available for a relatively short time period, 1972–1998, we will use govshare as our principal measure of government spending.8