Here we argue for the use of cointegration and error correction analysis to combine economic factors that are nonstationary with political factors that are stationary into an empirical model of the evolution of public policy over long periods. The approach is applied to disentangle the contributions of economics and politics to the evolution of public expenditure by the Government of Canada over 130 years. Political competition emerges as the primary political factor affecting government size.

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Keywords Cointegration, Conditional convergence, Political competition, Politics versus economics, Public expenditure, Size of government
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Journal Public Choice
Ferris, J.S, Park, S.-B. (Soo-Bin), & Winer, S. (2008). Studying the role of political competition in the evolution of government size over long horizons. Public Choice, 137(1-2), 369–401. doi:10.1007/s11127-008-9334-6