Intergovernmental transfers and procyclical public spending

Andrew Abbott and Philip Jones

Economics Letters, 2012, vol. 115, issue 3, 447-451

Abstract: This paper tests the predictions that (i) sub-central government expenditures are procyclical and (ii) sub-central government expenditures are likely to be more procyclical than central government spending. The predictions are based on the importance of ‘voracity effects’ and on the proposition that they are systematically more pervasive if spending is financed by intergovernmental transfers. Evidence from 23 OECD countries between 1995 and 2006 indicates that sub-central government spending is more procyclical than central government expenditure.

Keywords: Sub-central government spending; Intergovernmental transfers; Voracity effects; Business cycles (search for similar items in EconPapers)
JEL-codes: E62 H50 H60 H70 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:115:y:2012:i:3:p:447-451

DOI: 10.1016/j.econlet.2011.12.104

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