Government efficiency, institutions, and the effects of fiscal consolidation on public debt

Heylen, Freddy; Hoebeeck, Annelies; Buyse, Tim

doi:10.1016/j.ejpoleco.2013.03.001

Cited by 53 publications

(32 citation statements)

References 27 publications

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“…Studies on the impact of fiscal consolidation on unemployment are scarce. For example, with respect to public employment, Heylen, Hoebeeck, and Buyse () find that public wage bill cuts do not contribute to lower public debt ratios when public sector efficiency is high. In a study for a panel of EU countries, Turrini () shows that the impact of fiscal consolidations on unemployment is temporary and significant mainly for expenditures.…”

Section: Literature Reviewmentioning

confidence: 99%

Functional components of public expenditure, fiscal consolidations, and economic activity

Castro

2017

Economics & Politics

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This paper analyses how the functional components of public expenditure and spending‐driven consolidations affect the economic growth, unemployment, and income inequality. A dynamic panel data least squares dummy variable estimator estimator is employed over a sample of 15 European Union countries during the period 1990–2012. The empirical results show that real GDP growth decreases when fiscal austerity measures are implemented, especially if they are spending‐driven. Cuts in public expenditure undermine economic growth, namely if they slash spending on public order, recreation, and education. Spending cuts on education, in particular, affect the investment in human capital, harming not only growth but also economic, social, and human development. The unemployment rate also proved to be significantly boosted when austerity measures restrict spending on education, whereas income inequality rises when social protection expenditures are cut.

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Section: Literature Reviewmentioning

confidence: 99%

Functional components of public expenditure, fiscal consolidations, and economic activity

Castro

2017

Economics & Politics

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“…Some studies have been conducted on fiscal consolidation as a measure to reduce government debt in other countries (Heylen, Hoebeeck & Buyse, 2013). In a study of 21 member countries of the Organisation for Economic Cooperation and Development (OECD), the authors found that an increase in taxes and a decrease in expenditure contribute significantly to debt reduction in the long run.…”

Section: Literature Reviewmentioning

confidence: 99%

Government Debt Reduction in the Usa and Greece: A Comparative Vecm Analysis

Mah¹,

Mongale²,

Mukuddem‐Petersen³

2016

EJBE

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“…Based on a large country sample, Angelopoulos et al (2008) show that the intensively debated relation between government size and economic growth is conditional on the efficiency of government spending. And Heylen et al (2013) find evidence that attempts for budget consolidation are likely to be more successful when consolidation programs are adopted by a more efficient government apparatus. In their view, efficiency fosters consolidation through at least two channels:…”

Section: Introductionmentioning

confidence: 99%

“…The notion is that unions are typically opposed to wage or hiring freezes, and powerful unions can block public employment cuts in situations of negative GDP shock, thus delaying adjustment. Heylen et al (2011Heylen et al ( , 2013 report that curbing government employment and public sector wages may contribute substantially to successful consolidation, but only when efficiency in public administration is low. Put differently, downsizing an already efficient public sector is not a good strategy to consolidate budgets.…”

Section: Relevant Strands In the Literaturementioning

confidence: 99%

Reforming the Public Administration: The Role of Crisis and the Power of Bureaucracy

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe need to balance austerity with growth policies has put government efficiency high on the economic policy agenda in Europe. Administrative reforms which boost the efficiency of the administration can alleviate the trade-off between consolidation and public service provision. Against such backdrop, this study explores the determinants of efficiency enhancing public administration reforms for a panel of EU countries using a novel reform indicator. The findings support the political-economic reasoning: an economic and fiscal crisis is a potent catalyst for reforms, but a powerful bureaucracy effectively constrains the opportunities of a crisis to promote this particular type of reform. Furthermore, there is evidence for horizontal learning from other EU countries, and for vertical learning associated with a particular type of EU transfers. JEL codes: H83, H11, D73

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Government efficiency, institutions, and the effects of fiscal consolidation on public debt

Cited by 53 publications

References 27 publications

Functional components of public expenditure, fiscal consolidations, and economic activity

Functional components of public expenditure, fiscal consolidations, and economic activity

Government Debt Reduction in the Usa and Greece: A Comparative Vecm Analysis

Reforming the Public Administration: The Role of Crisis and the Power of Bureaucracy

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