Is Social Spending Procyclical? Evidence for Developing Countries

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

doi:10.1016/j.worlddev.2012.07.003

Cited by 34 publications

(17 citation statements)

References 20 publications

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“…In turn, the distinction between good and bad times based on observed levels of the output gap draws on the standard approach to capture fiscal asymmetry in the specialized literature (Balassone and Kumar, 2007;Clements, Faircloth and Verhoeven, 2007; Arze del Granado, Gupta and Hadjdenberg, 2013 and instrumental variables (IV). When using difference GMM, the output gap is instrumented with both "internal" (past values of the endogenous regressor) and "external" instruments.…”

Section: Data and Estimationmentioning

confidence: 99%

“…Exceptions include Carneiro and Garrido (2015) and Balassone and Kumar (2007) for developing countries in general, and Clements, Faircloth and Verhoeven (2007) and Gavin and Perotti (1997) for Latin America in particular. 2 See Arze del Granado, Gupta and Hadjdenberg (2013) and Akitoby et al (2006) for important exceptions. While the former looks at the cyclicality of social (education, health) expenditures, the latter distinguishes between short and long-term reactions of different expenditures items to GDP, including capital and current spending.…”

Section: Introductionmentioning

confidence: 99%

“…While fiscal asymmetry in developing countries has been studied in the past, extant studies have concentrated on either total (Carneiro and Garrido, 2015;Balassone and Kumar, 2007) or social spending such as education and health (Arze del Granado, Gupta and Hadjdenberg, 2013). Previous research that has looked at the cyclical behavior of current/capital spending has not addressed whether procyclicality originates specifically in good or bad times (Akitoby et al, 2006), or has done so for only a subset of economies (oil-exporting countries) in the context of studying exchange rate dynamics (Arezki and Imsail, 2013).…”

Section: Introductionmentioning

confidence: 99%

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Current Expenditure Upswings in Good Times and Capital Expenditure Downswings in Bad Times?: New Evidence from Developing Countries

Ardanaz

Izquierdo

2017

SSRN Journal

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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. Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license. Terms of use: Documents inFollowing a peer review process, and with previous written consent by the Inter-American Development Bank (IDB), a revised version of this work may also be reproduced in any academic journal, including those indexed by the American Economic Association's EconLit, provided that the IDB is credited and that the author(s) receive no income from the publication. Therefore, the restriction to receive income from such publication shall only extend to the publication's author(s). With regard to such restriction, in case of any inconsistency between the Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives license and these statements, the latter shall prevail.Note that link provided above includes additional terms and conditions of the license.The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent.http://www.iadb.org 2017 Abstract * This paper studies the cyclical properties of two key expenditure categories (current and public investment spending) during the different phases of the business cycle (good times and bad times). Anecdotal evidence suggests that policymakers usually cannot resist the temptation of spending more on current expenditure in good times, but only pick capital expenditures to adjust during bad times. The paper answers the following questions: do current and capital expenditures react to the business cycle? If so, by how much, and why? In a sample of more than 100 developing countries and 30 developed countries observed between 1980 and 2014, a new empirical regularity specific to developing countries is identified: upswings are associated with increases in current primary expenditures (e.g., wages, transfers) only, while public investment falls and current spending remains acyclical during downturns. Evidence is also presented that this asymmetrical response is more pronounced in countries where incumbent politicians face shorter time horizons and weak institutions. Other ty...

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Section: Data and Estimationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Current Expenditure Upswings in Good Times and Capital Expenditure Downswings in Bad Times?: New Evidence from Developing Countries

Ardanaz

Izquierdo

2017

SSRN Journal

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“…In the most EU countries, it varied between 12 and 15% in 2010 (14). Many researches show the significant correlation between higher spending on health in the countries that invest higher percentage of GDP per capita in comparison to the lower-income countries (15)(16)(17)(18).…”

Section: Introductionmentioning

confidence: 99%

Gross Domestic Product and Health Expenditure Growth in Balkan and East European Countries—Three-Decade Horizon

Stepovic

Rančić

Vekić

et al. 2020

Front. Public Health

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Background: Dynamics of health care has changed over time along with development of the countries themselves. The aim of the study is to compare macroeconomic and health expenditure indicators of interest, such as total health expenditure (THE) as percentage of global domestic product, global domestic product per capita in US$, and private households' out-of-pocket payments of Balkan and Eastern European countries on health, as well as to assess their progress over the observed period. Methods: This research report represents a descriptive data analysis of indicators extracted from the European Health for All database. The data were analyzed using a linear trend and regression analysis to estimate the timeline changes. Results: Greece and Slovenia have the largest median values of global domestic product per capita throughout the whole period, and the largest increment trend was in Lithuania. Median value in out-of-pocket payment of THE was the highest in Albania and Ukraine, while the largest decrease in trend was noticed in Albania and Bosnia and Herzegovina. Bosnia and Herzegovina and Greece had the largest median value of THE as percentage of Gross Domestic Product (GDP) in the observed period, while regression trend analysis showed that Serbia had the largest increase. Most of the countries showed a significant correlation between observed indicators. Conclusion: Trends in the economy must be constantly monitored due to the fact that the population is aging and non-communicable diseases are multiplying, which requires innovations in medical treatment and pharmaceutical development.

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“…Sin embargo, hay evidencia de que esta contra-ciclicidad está limitada por la capacidad de endeudamiento del Gobierno (Abbott & Jones, 2012b). Son los países desarrollados los que muestran más ciclicidad en los gastos de seguridad social (Arze del Granado, Gupta, & Hajdenberg, 2013;Prasad & Gerecke, 2010). En países asiáticos, los gastos en seguridad social muestran patrones procíclicos (Ahuja & Murthy, 2017).…”

Section: Introductionunclassified

Ciclicidad de las transferencias sociales en Costa Rica

Abarca

Robalino

Hall

et al. 2018

RCE

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En este artículo, se busca determinar si las transferencias sociales del Gobierno en Costa Rica han sido procíclicas o contra-cíclicas. Para examinar la presencia de ciclicidad, se utilizó correlaciones entre las series de producción y de transferencias, luego de que las variables fueran filtradas con el método de Hodrick-Prescott. También se utilizan métodos de regresión explicando el crecimiento de las transferencias con el crecimiento de la producción, tanto de forma contemporánea como rezagada. Se utilizaron datos trimestrales para las estimaciones y se encontró que las transferencias contemporáneas no responden con fuerza al ciclo; sin embargo, sí responden al rezago (trimestre anterior), donde hay una fuerte relación contra-cíclica. Por otra parte, se determina que la mayoría de los programas sociales importantes tienen una relación negativa con la producción trimestral rezagada. Esto implica que, cuando la producción se desacelera, hay un aumento en el siguiente trimestre del gasto en los programas sociales. Concluimos que, en Costa Rica, los programas sociales, por su ciclicidad, han tenido el potencial de reducir los impactos negativos de los choques económicos sobre las poblaciones más vulnerables.

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Is Social Spending Procyclical? Evidence for Developing Countries

Cited by 34 publications

References 20 publications

Current Expenditure Upswings in Good Times and Capital Expenditure Downswings in Bad Times?: New Evidence from Developing Countries

Current Expenditure Upswings in Good Times and Capital Expenditure Downswings in Bad Times?: New Evidence from Developing Countries

Gross Domestic Product and Health Expenditure Growth in Balkan and East European Countries—Three-Decade Horizon

Ciclicidad de las transferencias sociales en Costa Rica

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