The relationship between trade openness and government size: Does disaggregating government expenditure matter?

► We examine the causal relationship between openness and government size. ► Aggregate and functionally disaggregated data on government expenditures is used. ► We find no evidence of a positive causal relationship between openness and government size. ► Splitting sample into low and high income countries provides similar results. ► Openness has a positive causal relationship only with education expenditures in low income countries.