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Do governments re-prioritise spending?: First insights from COFOG data on public spending reallocation in OECD countries

Author

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  • Sebastian Barnes
  • Boris Cournède
  • Julien Pascal

Abstract

This study investigates the capacity of governments to reallocate spending across different functions of the government. It mobilises the COFOG dataset for the period 1996 - 2017, which allows comparing public spending mixes at detailed levels in ways that are consistent across countries and over time.Three main empirical findings are established. Firstly, countries differ in their propensity to reallocate public spending across functions and countries that reallocate more are also countries with sounder governance and tighter fiscal rules in place. Secondly, obstacles to reallocation are identified, with governments avoiding nominal cuts, especially in health and social expenditures. Thirdly, while the analysis underlines some degree of convergence among OECD countries in terms of public spending allocation, this convergence is not universal. A cluster of Nordic countries persists, and Greece is identified as diverging from the rest of countries included in the sample.

Suggested Citation

  • Sebastian Barnes & Boris Cournède & Julien Pascal, 2023. "Do governments re-prioritise spending?: First insights from COFOG data on public spending reallocation in OECD countries," OECD Economics Department Working Papers 1785, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1785-en
    DOI: 10.1787/56dda017-en
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    More about this item

    Keywords

    COFOG; fiscal frameworks; government spending; public finances;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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