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Spending in social services in China: A multi-country analysis

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  • Bajo-Rubio, Oscar
  • Gómez‐Plana, Antonio G.

Abstract

In this paper, we simulate the effects of an increase in the levels of public spending in health care and social assistance in the Chinese economy, and examine its global effects, i.e., the effects on the main macroeconomic variables of seven regions of the world economy, namely, China, Japan, United States, European Union, Latin America, Asia‐Pacific and Rest of the World. Three different rules to finance the increase in public expenditure are considered. The empirical methodology makes use of a computable general equilibrium model, through an extension of the Global Trade Analysis Project model. The policy measure simulated led to either expansionary or contractionary effects on China’s activity levels, depending on whether the government deficit is left to increase, or if taxes are raised instead in order to offset it. While no sector seemed to be particularly hurt by this measure, trade flows were negatively affected, but this did not seem to have a strong influence on the rest of the world.

Suggested Citation

  • Bajo-Rubio, Oscar & Gómez‐Plana, Antonio G., 2020. "Spending in social services in China: A multi-country analysis," GLO Discussion Paper Series 447, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:447
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    Keywords

    Computable general equilibrium; Spending in social services; Global economy; China;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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