OECD Journal: Economic Studies
- Discontinued
- Continues:
- OECD Economic Studies
OECD Journal: Economic Studies publishes articles in the area of economic policy analysis, applied economics and statistical analysis, generally with an international or cross-country dimension. It draws significantly on economic papers produced by the OECD Economics Department, other parts of the OECD Secretariat and the Organisation’s intergovernmental committees.
- Semiannual
- ISSN: 19952856 (online)
- https://doi.org/10.1787/19952856
The dynamics of social expenditures over the cycle
A comparison across OECD countries
This paper studies the cyclical behaviour of public social spending in 20 OECD countries observed over the period between 1982 and 2011. In view of the recent discussion on cutting the budget deficit, the paper pays particular attention to whether social spending is pro-cyclical or countercyclical, whether it changes asymmetrically during expansions and recessions and whether the asymmetric changes in social spending contribute to a drift in social expenditures over time. The links between social spending levels and key economic variables, such as economic growth, provide also a useful context for discussing current social expenditure trends. The estimates, based on a system-GMM estimator, suggest that an upward ratchet effect exists. The effect is robust to a large number of alternative specifications.
JEL classification: E32, E62, H50, I00
Keywords: Fiscal policy, economic cycles, social spending, ratchet effect
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