Determinants of Leviathan in the European Countries
Determinants of Leviathan in the European Countries

Summary/Abstract: The article focuses on factors that influence the government size, in literature known as revenue- maximizing Leviathan using the instrument of taxing. The theory admits two possibilities how to constrain the tax maximizing incentives of the “beast”, constitutional constraint and intergovernmental competition. Investigation on Leviathan´s determinants is made using the cluster analysis of 30 European countries during the period from 1995 to 2014. After segmentation of countries into five clusters the regression models of fixed effects and random effects using panel data were estimated for each cluster. The influence of public deficit on Leviathan seems to be stable and negative. The influence of redistribution needs reflecting the population out of working age and country size on Leviathan is significant but varies depending on cluster. The importance of fiscal decentralization, which is according to overwhelming literature considered as a main constraint to the Leviathan, is feeble. The article is published within project VEGA no. 1/0559/16.

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