What do OECD countries cut first at a time of fiscal adjustments? A dynamic panel data approach
Following the present atmosphere of budgetary cuts we analyze the effects of fiscal consolidation on the composition of government expenditures by functions. Using a dynamic voter group decision model and exploiting the panel structure of the dataset â€“ 26 OECD countries over the period 1970-1997- by GMM estimation we find that fiscal adjustments protect social expenditure. Nevertheless, we find that among social expenditure, those being also productive such as education and health are even more protected than those not being productive as social welfare expenditure. Moreover, fiscal adjustments do not fall primarily over the most productive expenditure, transport and communications, but over defense and economic services.
|Date of creation:||01 Dec 2003|
|Date of revision:|
|Contact details of provider:|| Postal: 2127 North Hall, Santa Barbara, CA 93106-9210|
Phone: (805) 893-3670
Fax: (805) 893-8830
Web page: http://www.escholarship.org/repec/ucsbecon_dwp/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Martin Ravallion, 2002. "Are the Poor Protected from Budget Cuts? Evidence for Argentina," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 95-121, May.
- Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996.
"The composition of public expenditure and economic growth,"
Journal of Monetary Economics,
Elsevier, vol. 37(2-3), pages 313-344, April.
- Shantayanan Devarajan & Vinaya Swaroop & Heng-fu Zou, 1996. "The composition of public expenditure and economic growth," CEMA Working Papers 77, China Economics and Management Academy, Central University of Finance and Economics.
- Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-96, June.
- Steven G. Craig & Robert P. Inman, 1985.
"Education, Welfare, and the "New" Federalism: State Budgeting in a Federalist Public Economy,"
NBER Working Papers
1562, National Bureau of Economic Research, Inc.
- Steven Craig & Robert P. Inman, 1986. "Education, Welfare and the "New" Federalism: State Budgeting in a Federalist Public Economy," NBER Chapters, in: Studies in State and Local Public Finance, pages 187-228 National Bureau of Economic Research, Inc.
- Ravallion, Martin, 1999.
"Is more targeting consistent with less spending?,"
Policy Research Working Paper Series
2079, The World Bank.
- KEEN, Michael & MARCHAND, Maurice, 1996.
"Fiscal Competition and the Pattern of Public Spending,"
CORE Discussion Papers
1996001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Keen, Michael & Marchand, Maurice, 1997. "Fiscal competition and the pattern of public spending," Journal of Public Economics, Elsevier, vol. 66(1), pages 33-53, October.
- Bergstrom, Theodore C & Rubinfeld, Daniel L & Shapiro, Perry, 1982. "Micro-Based Estimates of Demand Functions for Local School Expenditures," Econometrica, Econometric Society, vol. 50(5), pages 1183-1205, September.
- Chetan Ghate & Paul J. Zak, .
"Growth of Government And The Politics of Fiscal Policy,"
Claremont Colleges Working Papers
2000-19, Claremont Colleges.
- Ghate, Chetan & Zak, Paul J., 2002. "Growth of government and the politics of fiscal policy," Structural Change and Economic Dynamics, Elsevier, vol. 13(4), pages 435-455, December.
- Davoodi, Hamid & Zou, Heng-fu, 1998.
"Fiscal Decentralization and Economic Growth: A Cross-Country Study,"
Journal of Urban Economics,
Elsevier, vol. 43(2), pages 244-257, March.
- Hamid Davoodi & Heng-fu Zou, 1996. "Fiscal Decentralization and Economic Growth: A Cross-Country Study," CEMA Working Papers 98, China Economics and Management Academy, Central University of Finance and Economics.
- Gupta, Sanjeev & de Mello, Luiz & Sharan, Raju, 2001. "Corruption and military spending," European Journal of Political Economy, Elsevier, vol. 17(4), pages 749-777, November.
- Vito Tanzi, 2000. "Globalization and the Future of Social Protection," IMF Working Papers 00/12, International Monetary Fund.
- Tanzi,Vito & Schuknecht,Ludger, 2000.
"Public Spending in the 20th Century,"
Cambridge University Press, number 9780521664103, 1.
- Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
- Antonio Golini, 1998. "Demographics, Public Spending and Social Programs," LABOUR, CEIS, vol. 12(1), pages 119-143, 03.
- Lindert, Peter H., 1996. "What Limits Social Spending?," Explorations in Economic History, Elsevier, vol. 33(1), pages 1-34, January.
- Sam Peltzman, 1980.
"The Growth of Government,"
University of Chicago - George G. Stigler Center for Study of Economy and State
1, Chicago - Center for Study of Economy and State.
- Dunne, John Paul & Pashardes, Panos & Smith, Ronald P, 1984. "Needs, Costs and Bureaucracy: The Allocation of Public Consumption in the UK," Economic Journal, Royal Economic Society, vol. 94(373), pages 1-15, March.
- Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
- Alesina, Alberto Francesco & Perotti, Roberto & Tavares, Jose, 1998. "The Political Economy of Fiscal Adjustments," Scholarly Articles 12553724, Harvard University Department of Economics.
- Randolph, Susan & Bogetic, Zeljko & Hefley, Dennis, 1996. "Determinants of public expenditure on infrastructure : transportation and communication," Policy Research Working Paper Series 1661, The World Bank.
- Thai-Thanh Dang & Pablo Antolín & Howard Oxley, 2001. "Fiscal Implications of Ageing: Projections of Age-Related Spending," OECD Economics Department Working Papers 305, OECD Publishing.
- Tridimas, George, 2001. " The Economics and Politics of the Structure of Public Expenditure," Public Choice, Springer, vol. 106(3-4), pages 299-316, March.
- Jonakin, Jon & Stephens, Mark, 1999. "The impact of adjustment and stabilization policies on infrastructure spending in Central America," The North American Journal of Economics and Finance, Elsevier, vol. 10(1), pages 293-308.
- Alberto Alesina & Roberto Perotti & José Tavares, 1998. "The Political Economy of Fiscal Adjustments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 197-266.
- Gemmell, Norman & Morrissey, Oliver & Pinar, Abuzer, 1999. "Fiscal illusion and the demand for government expenditures in the UK," European Journal of Political Economy, Elsevier, vol. 15(4), pages 687-704, November.
- Manuel Arellano & Stephen Bond, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Oxford University Press, vol. 58(2), pages 277-297.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Andrea Zaghini, 2001. "Fiscal adjustments and economic performing: a comparative study," Applied Economics, Taylor & Francis Journals, vol. 33(5), pages 613-624.
- Peacock, Alan & Scott, Alex, 2000. " The Curious Attraction of Wagner's Law," Public Choice, Springer, vol. 102(1-2), pages 1-17, January.
- Tanzi, Vito & Schuknecht, Ludger, 1997. "Reforming government: An overview of recent experience," European Journal of Political Economy, Elsevier, vol. 13(3), pages 395-417, September.
When requesting a correction, please mention this item's handle: RePEc:cdl:ucsbec:qt4j744960. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff)
If references are entirely missing, you can add them using this form.