Do Governments Spend More to Compensate for Openness?

How will increased economic openness affect the welfare state? Standard economic theory predicts that globalization constrains a government's ability to use counter-cyclical fiscal policy instruments and to tax and spend generally. Rodrick's seminal paper, in contrast, argues that governments spend more to compensate citizens for the increased risk brought about by openness. To Rodrik, citizen income derived from government spending, though lower on average, is less volatile overall. He presents cross-national evidence on international trade flows and spending to buttress this claim. I replicate this argument, but I find that Rodrik's results are sensitive to how he treats missing values. If, instead of averaging out missingness, missing values are omitted or multiply-imputed, the coefficient estimates of interest are sharply attenuated and no longer significant. I argue that scholars must pay close attention to missing data to avoid biased results. Additionally, I extend the analysis. Using an updated data source, I find that increased trade flows are not associated with increased government spending - no matter how missingness is treated. Statutory trade openness does, however, have some positive effect on government spending. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]