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Stabilization effects of social spending: Empirical evidence from a panel of OECD countries

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  • Furceri, Davide

Abstract

The aim of this paper is to assess the ability of social spending to smooth output shocks and to provide stabilization. The results show that overall social spending is able to smooth about 15 percent of a shock to GDP. Among its sub-categories, social spending devoted to Old Age, Health and Unemployment are those that contribute more to provide smoothing. Moreover, the stabilization effects of social spending are significantly larger in those countries where the size of social spending is higher, and in countries in which social spending is less volatile. The empirical results are economically and statistically significant, and robust.

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  • Furceri, Davide, 2010. "Stabilization effects of social spending: Empirical evidence from a panel of OECD countries," The North American Journal of Economics and Finance, Elsevier, vol. 21(1), pages 34-48, March.
  • Handle: RePEc:eee:ecofin:v:21:y:2010:i:1:p:34-48
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    Citations

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    Cited by:

    1. Hayashi, Masayoshi, 2014. "Forecasting welfare caseloads: The case of the Japanese public assistance program," Socio-Economic Planning Sciences, Elsevier, pages 105-114.
    2. Michael, Bryane & Popov, Maja, 2011. "The Size and Structure of Government," MPRA Paper 53283, University Library of Munich, Germany.
    3. Davide Furceri & Aleksandra Zdzienicka, 2012. "The Effects of Social Spending on Economic Activity: Empirical Evidence from a Panel of OECD Countries," Fiscal Studies, Institute for Fiscal Studies, pages 129-152.
    4. Simon Voigts, 2014. "Why the split of payroll taxation between firms and workers matters for macroeconomic stability," SFB 649 Discussion Papers SFB649DP2014-061, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    5. Tomi Ovaska & Joseph Palardy, 2014. "Business Cycle Volatility: Does the European-Style Safety Net Help?," Journal of Private Enterprise, The Association of Private Enterprise Education, pages 57-81.
    6. Davide Furceri & Aleksandra Zdzienicka, 2012. "Financial Integration and Fiscal Policy," Open Economies Review, Springer, pages 805-822.
    7. Masayoshi Hayashi, 2013. "On the Decomposition of Regional Stabilization and Redistribution," CIRJE F-Series CIRJE-F-910, CIRJE, Faculty of Economics, University of Tokyo.
    8. Schoder, Christian, 2013. "Credit vs. demand constraints: The determinants of US firm-level investment over the business cycles from 1977 to 2011," The North American Journal of Economics and Finance, Elsevier, pages 1-27.
    9. Davide Furceri & Aleksandra Zdzienicka, 2012. "The Effects of Social Spending on Economic Activity: Empirical Evidence from a Panel of OECD Countries," Fiscal Studies, Institute for Fiscal Studies, pages 129-152.
    10. Aksoy, Yunus & Melina, Giovanni, 2011. "U.S. fiscal indicators, inflation and output," The North American Journal of Economics and Finance, Elsevier, pages 221-236.
    11. Masayoshi Hayashi, 2012. "Channels of Stabilization in a System of Local Public Health Insurance: The Case of the National Health Insurance in Japan," CIRJE F-Series CIRJE-F-847, CIRJE, Faculty of Economics, University of Tokyo.
    12. Ronald Mendoza & Ronald, 2010. "Inclusive Crises, Exclusive Recoveries, and Policies to Prevent a Double Whammy for the Poor," Working papers 1004, UNICEF,Division of Policy and Strategy.
    13. Bryane Michael & Maja Popov, 2016. "The Failure of Theory to Predict the Way Public Sector Organisation Responds to its Organisational Environment and the Need for a Mosaic-View of Organisational Theory," Public Organization Review, Springer, vol. 16(1), pages 55-75, March.
    14. Thomas I. Palley, 2009. "Rethinking the Economics of Capital Mobility and Capital Controls," Working Papers wp193, Political Economy Research Institute, University of Massachusetts at Amherst.
    15. Agnello, Luca & Furceri, Davide & Sousa, Ricardo M., 2013. "How best to measure discretionary fiscal policy? Assessing its impact on private spending," Economic Modelling, Elsevier, vol. 34(C), pages 15-24.
    16. Aksoy, Yunus & Melina, Giovanni, 2011. "U.S. fiscal indicators, inflation and output," The North American Journal of Economics and Finance, Elsevier, pages 221-236.
    17. Riaz, Nimra & Munir, Kashif, 2016. "Fiscal Policy and Macroeconomic Stability in South Asian Countries," MPRA Paper 74247, University Library of Munich, Germany.

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