OECD Economics Department Working Papers
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Stabilization Effects of Social Spending
Empirical Evidence from a Panel of OECD Countries Overcoming the Financial Crisis in the United States
The aim of this paper is to assess the ability of social spending to smooth output shocks and to provide
stabilization. The results show that overall social spending is able to smooth about 16 percent of a shock to
GDP. Among its subcategories, social spending devoted to Old Age and Unemployment are those that
contribute more to provide smoothing. Moreover, the stabilization effects of social spending are
significantly larger in those countries where the size of social spending is higher. The empirical results are
economically and statistically significant and robust.
Keywords: fiscal policy, social spending, output stabilization
JEL:
E6: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook;
E0: Macroeconomics and Monetary Economics / General
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