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Government Spending in Canada and the United States

Listed author(s):
  • Suzanne Kennedy
  • Steven Gonzalez

It is well known that total government spending relative to GDP is higher in Canada than in the United States, but it is less clear where exactly Canadian governments spend more (or less) than their American counterparts. The reason for the confusion is that there are no readily available, internationally consistent statistics on consolidated government spending by function. This study adjusts data from national sources in order to develop reasonably comparable series for total government spending by function in Canada and the US. Based on these new series, we identify which spending categories explain the gap in spending between the two countries and we examine changes in the composition of spending between 1992 and 2001. We find that the most important category in explaining the gap in program spending between the two countries is income security, which includes, among other things, all social assistance and public pension benefits. Spending on health and education relative to GDP is virtually the same in both countries. Over time, the gap between program spending relative to GDP in the two countries has been reduced substantially. The main categories in which the gap was narrowed were income security, economic affairs (which includes, among other things, transportation and communications, and natural resource conservation and industrial development) and education. Il est généralement reconnu que le ratio des dépenses de l’ensemble des administrations publiques au PIB est supérieur au Canada par rapport aux États-Unis, mais il est moins évident dans quels secteurs les gouvernements canadiens dépensent plus (ou moins) que les gouvernements américains. Cette confusion tient au fait qu’il n’existe pas de statistiques facilement disponibles ou cohérentes à l’échelle internationale au sujet des dépenses publiques globales par fonction. Cette étude rajuste les données de sources nationales afin d’établir des séries raisonnablement comparables des dépenses publiques par fonction au Canada et aux États-Unis. Selon ces nouvelles séries, nous identifions les catégories de dépenses qui expliquent l’écart de dépenses entre les deux pays et nous examinons l’évolution de la composition des dépenses entre 1992 et 2001. Nous observons que la catégorie la plus importante qui explique l’écart des dépenses de programmes entre les deux pays est celle de la sécurité du revenu, qui inclut, entre autres, toutes les prestations d’aide sociale et des régimes de retraite universels. Le ratio des dépenses en santé au PIB et des dépenses en éducation au PIB sont presque identiques dans les deux pays. Graduellement, l’écart entre le ratio des dépenses de programmes au PIB dans les deux pays a été réduit sensiblement. Les principales catégories dans lesquelles l’écart a été réduit ont été la sécurité du revenu, les affaires économiques (ce qui comprend, entre autres, les transports et les communications, la conservation des ressources naturelles et le développement industriel) et l’éducation.

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Paper provided by Department of Finance Canada in its series Working Papers-Department of Finance Canada with number 2003-05.

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Date of creation:
Handle: RePEc:fca:wpfnca:2003-05
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