Is Social Spending Procyclical?

Granado, F. Javier Arze del; Gupta, Sanjeev; Hajdenberg, Alejandro

doi:10.2139/ssrn.1750723

Cited by 5 publications

(8 citation statements)

References 15 publications

(7 reference statements)

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“…For instance, in LIC and MIC commodity exporters, a 10 percent increase in commodity export prices leads to an average increase in social expenditure of 0.45 percentage points of GDP. This result is in line with Arze del Granado et al (2010).…”

Section: A Commodity Export Prices and Fiscal Outcomessupporting

confidence: 90%

“…In particular, Kaminsky (2010) documents that terms-of-trade booms are not necessarily associated with large fiscal surpluses in developing countries, reflecting the pro-cyclicality of government spending. In the same vein, Medina (2010) and Villafuerte et al (2010) find a strong response of fiscal revenue and expenditure to commodity prices in Latin America and the Caribbean, with significant differences across countries, and Arze del Granado et al (2010) find evidence of pro-cyclicality in social spending in developing countries. However, these analyses only covers a limited set of fiscal variables and countries, and fail to distinguish between commodity import and commodity export price shocks.…”

Section: Introductionmentioning

confidence: 90%

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Commodity Price Shocks and Fiscal Outcomes

Samaké

Spatafora²

2012

IMF Working Papers

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The experience of developing countries over 1990-2010 indicates that commodity prices have a significant impact on fiscal outcomes. Both revenue and expenditure rise in response to commodity (import or export) price increases; the response of the fiscal deficit is ambiguous. A floating exchange rate regime only partially offsets the impact; foreign-exchange reserves do not dampen the effects. Hence, there is a strong case for fiscal hedging against commodity price shocks. Hedging instruments based on a limited set of benchmark world prices for a narrow set of commodities may suffice to realize most of the potential benefits.

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Section: A Commodity Export Prices and Fiscal Outcomessupporting

confidence: 90%

Section: Introductionmentioning

confidence: 90%

Commodity Price Shocks and Fiscal Outcomes

Samaké

Spatafora²

2012

IMF Working Papers

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“…Many empirical studies have identified an asymmetrical (dissimilar) the response of public expenditure during good and bad times or output upturns and downturns (Gavin & Perotti, 1997;Granado, Gupta& Hajdenberg, 2010). We examine this hypothesis by estimating equations ( 5) and ( 6).…”

Section: C) Multivariate Model With Output/revenue Upturns and Down T...mentioning

confidence: 99%

“…The present study drawn inspiration from many empirical studies for outlining the empirical strategy of the study (for eg. Gavin & Perotti (1997); Lane (2003); Talvi & Vegh (2005); Darby & Melitz (2008); Arena & Revilla (2009); Granado, Gupta & Hajdenberg (2010); Effiom (2019); Behera, Mohanty, & Dash (2019)).…”

Section: Empirical Strategymentioning

confidence: 99%

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Is Public Education Expenditure Pro-cyclical In India?

Ramanjini,

Gayithri

2023

Preprint

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This paper examines the cyclicality of public education expenditure of Indian states using recent data (pre-Covid 19) and advanced estimation techniques. The present study has drawn the required data from Comptroller and Auditor General (CAG) of India and Reserve Bank of India. The study adopted System GMM (one-step) to assess the cyclicality of public education expenditure. The empirical results suggest that public education expenditure is pro-cyclical with respect to states’ GSDP. Expenditure on higher levels of education shows a relatively higher degree of pro-cyclicality than lower levels of education. Economic downturns seem to have hampered public investment on education and more specifically public investment on higher levels of education across Indian states, as pro-cyclicality of education expenditure is symmetrical. On the other hand, the fiscal transfers from the Union government are not enabling the state governments to protect the expenditure levels of the education sector during economic downturns. Hence, there is a need for incorporating relevant instruments in the intergovernmental transfer system that enables the states to provide minimum levels of public services such as education and healthcare. JEL: I220, E62, E63.

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