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Procyclical government spending: Patterns of pressure and prudence in the OECD


  • Abbott, Andrew
  • Jones, Philip


This paper tests for differences in the cyclicality of government spending across functional categories. Evidence from 20 OECD countries suggests that procyclicality is more likely in smaller functional budgets, but capital spending is more likely to be procyclical for the larger spending categories.

Suggested Citation

  • Abbott, Andrew & Jones, Philip, 2011. "Procyclical government spending: Patterns of pressure and prudence in the OECD," Economics Letters, Elsevier, vol. 111(3), pages 230-232, June.
  • Handle: RePEc:eee:ecolet:v:111:y:2011:i:3:p:230-232

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    References listed on IDEAS

    1. Pedroni, Peter, 2004. "Panel Cointegration: Asymptotic And Finite Sample Properties Of Pooled Time Series Tests With An Application To The Ppp Hypothesis," Econometric Theory, Cambridge University Press, vol. 20(03), pages 597-625, June.
    2. Talvi, Ernesto & Vegh, Carlos A., 2005. "Tax base variability and procyclical fiscal policy in developing countries," Journal of Development Economics, Elsevier, vol. 78(1), pages 156-190, October.
    3. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    4. Arena, Marco & Revilla, Julio E., 2009. "Pro-cyclical fiscal policy in brazil: evidence from the states," Policy Research Working Paper Series 5144, The World Bank.
    5. Lane, Philip R., 2003. "The cyclical behaviour of fiscal policy: evidence from the OECD," Journal of Public Economics, Elsevier, vol. 87(12), pages 2661-2675, December.
    6. Zvi Hercowitz & Michel Strawczynski, 2004. "Cyclical Ratcheting in Government Spending: Evidence from the OECD," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 353-361, February.
    7. Akitoby, Bernardin & Clements, Benedict & Gupta, Sanjeev & Inchauste, Gabriela, 2006. "Public spending, voracity, and Wagner's law in developing countries," European Journal of Political Economy, Elsevier, vol. 22(4), pages 908-924, December.
    8. Fiorito, Riccardo & Kollintzas, Tryphon, 1994. "Stylized facts of business cycles in the G7 from a real business cycles perspective," European Economic Review, Elsevier, vol. 38(2), pages 235-269, February.
    9. John Hills, 2002. "Following or Leading Public Opinion? Social Security Policy and Public Attitudes Since 1997," Fiscal Studies, Institute for Fiscal Studies, vol. 23(4), pages 539-558, December.
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    Cited by:

    1. Abbott, Andrew & Jones, Philip, 2012. "Budget deficits and social protection: Cyclical government expenditure in the OECD," Economics Letters, Elsevier, vol. 117(3), pages 909-911.
    2. Go Kotera & Saisuke Sakai, 2017. "Complementarity between Merit Goods and Private Consumption: Evidence from estimated DSGE model for Japan," KIER Working Papers 978, Kyoto University, Institute of Economic Research.
    3. Makkonen, Teemu, 2013. "Government science and technology budgets in times of crisis," Research Policy, Elsevier, vol. 42(3), pages 817-822.
    4. Pellens, Maikel & Peters, Bettina & Hud, Martin & Rammer, Christian & Licht, Georg, 2018. "Public investment in R&D in reaction to economic crises: A longitudinal study for OECD countries," ZEW Discussion Papers 18-005, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Szarowska, Irena, 2012. "Public spending and Wagner’s law in Central and Eastern European Countries," MPRA Paper 59779, University Library of Munich, Germany.
    6. Szarowska Irena, 2013. "Relationship between government expenditure and output in the problematic regions in the European Union," Экономика региона, CyberLeninka;Федеральное государственное бюджетное учреждение науки «Институт экономики Уральского отделения Российской академии наук», issue 4 (36), pages 190-199.
    7. Szarowska, Irena, 2011. "Development and the cyclicality of government spending in the Czech Republic," MPRA Paper 32353, University Library of Munich, Germany.
    8. repec:bla:metroe:v:68:y:2017:i:1:p:147-184 is not listed on IDEAS
    9. Andrew Abbott & Philip Jones, 2013. "Procyclical government spending: a public choice analysis," Public Choice, Springer, vol. 154(3), pages 243-258, March.
    10. Abbott, Andrew & Jones, Philip, 2014. "‘Leaning Against an Open Door’: Ideology and the cyclicality of public expenditure," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 957-969.
    11. Irena Szarowská, 2016. "Quality of Public Finance and Economic Growth in the Czech Republic," Working Papers 0030, Silesian University, School of Business Administration.
    12. Andrew Abbott & Philip Jones, 2014. "Pressures to Increase Public Expenditure and Patterns of Procyclical Expenditure," Economic Issues Journal Articles, Economic Issues, vol. 19(2), pages 39-54, September.


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