Cultural Spending as a Fiscal Policy Indicator: An Empirical Study of Budgetary Constraints and Public Debt Dynamics in European Nations

Alexandru Florin Preda, Andreea Gabriela Tanase, Raluca Florentina Cretu and Viorel Costin Banta
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Alexandru Florin Preda: Bucharest University of Economic Studies, Bucharest, Romania
Andreea Gabriela Tanase: Bucharest University of Economic Studies, Bucharest, Romania
Raluca Florentina Cretu: Bucharest University of Economic Studies, Bucharest, Romania
Viorel Costin Banta: Bucharest University of Economic Studies, Bucharest, Romania

Oblik i finansi, 2025, issue 1, 79-87

Abstract: Public expenditure on cultural services reflects a society's dedication to preserving heritage, fostering creativity, and promoting social cohesion. Despite its importance, cultural spending often becomes a target for reductions during periods of fiscal stress or economic downturns as governments reallocate resources to perceived higher-priority areas. This study uses Eurostat data from European nations to examine the relationship between public expenditure on cultural services and government fiscal health. The article aims to assess whether cultural investment increases in times of fiscal surplus or suffers disproportionately during periods of high public debt and budgetary constraints. The econometric approach of this research is made by panel data regression, complemented by other statistical tests, studying the interlink between cultural spending and fiscal variables such as the general government balance sheet and debt-to-GDP ratios. Particular attention is paid to countries with high levels of public debt to assess whether or not cultural investment is deprioritized vis-a-vis other sectors. The study results indicate that cultural spending has been considered core, and governments prioritize it, even against the economic turmoil, for its more general contribution to social welfare and cultural capital. At the same time, cultural budgets might be inflexible in responding actively to macroeconomic conditions and reduce cultural investment's potential to serve as an economic recovery instrument in times of recession. This paper provides broader evidence on fiscal policy and public investment that policymakers and other stakeholders can use to develop strategies that protect cultural funding, even during periods of economic uncertainty, for long-term societal benefits.

Keywords: cultural economics; government balance sheet; fiscal policy; public investment; econometric analysis (search for similar items in EconPapers)
JEL-codes: C23 E62 H50 Z11 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:iaf:journl:y:2025:i:1:p:79-87

DOI: 10.33146/2307-9878-2025-1(107)-79-87

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