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Is Social Spending Procyclical?

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Author Info

  • Sanjeev Gupta
  • Alejandro Hajdenberg
  • Javier Arze del Granado

Abstract

This paper studies the cyclical behavior of public spending on health and education in 150 countries during 1987 - 2007. It finds that spending on education and health is procyclical in developing countries and acyclical in developed countries. In addition, education and health expenditures follow an asymmetric pattern in developing countries; they are procyclical during periods of positive output gap and acyclical during periods of negative output gap. Furthermore, the degree of cyclicality is higher the lower the level of economic development.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/234.

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Length: 22
Date of creation: 01 Oct 2010
Date of revision:
Handle: RePEc:imf:imfwpa:10/234

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Related research

Keywords: Developed countries; Developing countries; Government expenditures; Health care; expenditures; fiscal policy; health expenditures; public expenditures; total expenditures; public spending; expenditure; fiscal balance; government spending; education expenditures; public expenditure; total expenditure; recurrent expenditures; health expenditure; fiscal performance; fiscal variables; fiscal deficits; fiscal institutions; fiscal adjustment; budgetary funds; data on expenditures; fiscal resources; recurrent expenditure; expenditure policies; fiscal affairs; social expenditures; fiscal affairs department; expenditure share; classification of expenditure; tax revenues; tax base; discretionary fiscal policy; tax systems;

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References

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  1. Alberto Alesina & Guido Tabellini, 2005. "Why is fiscal policy often procyclical?," Levine's Bibliography 784828000000000465, UCLA Department of Economics.
  2. Ethan Ilzetzki & Carlos A. Vegh, 2008. "Procyclical Fiscal Policy in Developing Countries: Truth or Fiction?," NBER Working Papers 14191, National Bureau of Economic Research, Inc.
  3. Reinhart, Carmen & Kaminsky, Graciela & Vegh, Carlos, 2004. "When it rains, it pours: Procyclical capital flows and macroeconomic policies," MPRA Paper 13883, University Library of Munich, Germany.
  4. Ugo Panizza & Dany Jaimovich, 2007. "Procyclicality or Reverse Causality?," IDB Publications 6843, Inter-American Development Bank.
  5. Benjamin M. Friedman, 1979. "Crowding Out Or Crowding In? The Economic Consequences of Financing Government Deficits," NBER Working Papers 0284, National Bureau of Economic Research, Inc.
  6. Ernesto Talvi & Carlos A. Vegh, 2000. "Tax Base Variability and Procyclical Fiscal Policy," NBER Working Papers 7499, National Bureau of Economic Research, Inc.
  7. Ricardo J. Caballero & Arvind Krishnamurthy, 2004. "Fiscal Policy and Financial Depth," NBER Working Papers 10532, National Bureau of Economic Research, Inc.
  8. Fabrizio Balassone & Maura Francese & Stefania Zotteri, 2008. "Cyclical asymmetry in fiscal variables," Temi di discussione (Economic working papers) 671, Bank of Italy, Economic Research and International Relations Area.
  9. Andres Velasco, 1997. "A Model of Endogenous Fiscal Deficits and Delayed Fiscal Reforms," NBER Working Papers 6336, National Bureau of Economic Research, Inc.
  10. Cragg, John G. & Donald, Stephen G., 1993. "Testing Identifiability and Specification in Instrumental Variable Models," Econometric Theory, Cambridge University Press, vol. 9(02), pages 222-240, April.
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Cited by:
  1. Ant�nio Afonso & Jo�o Tovar Jalles, 2013. "The cyclicality of education, health, and social security government spending," Applied Economics Letters, Taylor & Francis Journals, vol. 20(7), pages 669-672, May.

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