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Is Social Spending Procyclical? Evidence for Developing Countries

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  • Arze del Granado, Javier
  • Gupta, Sanjeev
  • Hajdenberg, Alejandro

Abstract

This paper studies the cyclical behavior of public spending on health and education in 145 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.

Suggested Citation

  • Arze del Granado, Javier & Gupta, Sanjeev & Hajdenberg, Alejandro, 2013. "Is Social Spending Procyclical? Evidence for Developing Countries," World Development, Elsevier, vol. 42(C), pages 16-27.
    • Handle: RePEc:eee:wdevel:v:42:y:2013:i:c:p:16-27
    DOI: 10.1016/j.worlddev.2012.07.003
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    6. Ardanaz, Martín & Izquierdo, Alejandro, 2022. "Current expenditure upswings in good times and public investment downswings in bad times? New evidence from developing countries," Journal of Comparative Economics, Elsevier, vol. 50(1), pages 118-134.
    7. Abarca, Alejandro & Robalino, Juan & Hall, Luis & Pérez, Esteban, 2018. "Cyclicity of the social transfers in Costa Rica," Revista de Ciencias Económicas, Instituto de Investigaciones en Ciencias Económicas, Universidad de Costa Rica, vol. 36(2), July.
    8. João Tovar Jalles, 2019. "On the Cyclicality of Social Expenditure: New Time-Varying evidence from Developing Economies," Working Papers REM 2019/82, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    9. João T. Jalles, 2020. "Explaining Africa's public consumption procyclicality: Revisiting old evidence," International Finance, Wiley Blackwell, vol. 23(2), pages 297-323, August.
    10. Ardanaz, Martín & Izquierdo, Alejandro, 2017. "Current Expenditure Upswings in Good Times and Capital Expenditure Downswings in Bad Times?: New Evidence from Developing Countries," IDB Publications (Working Papers) 8558, Inter-American Development Bank.
    11. Jalles, João Tovar, 2020. "Social expenditure cyclicality: New time-varying evidence in developing economies," Economic Systems, Elsevier, vol. 44(3).
    12. Rosella Cappella Zielinski & Benjamin O Fordham & Kaija E Schilde, 2017. "What goes up, must come down? The asymmetric effects of economic growth and international threat on military spending," Journal of Peace Research, Peace Research Institute Oslo, vol. 54(6), pages 791-805, November.
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    14. Jalles, João Tovar, 2021. "Dynamics of government spending cyclicality," Economic Modelling, Elsevier, vol. 97(C), pages 411-427.

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