Cyclicity of the social transfers in Costa Rica

Alejandro Abarca, Juan Robalino (), Luis Hall and Esteban Pérez

Revista de Ciencias Económicas, 2018, vol. 36, issue 2

Abstract: In this article, we try to determine if the social transfers of the Government in Costa Rica have been pro-cyclical or counter-cyclical. To examine the presence of cyclicity, correlations were used between the production and transfer series, after the variables were filtered using the Hodrick-Prescott method. Regression methods are also used to explain the growth of transfers with the growth of production, both contemporaneously and lagging behind. Quarterly data were used for the estimates and it was found that the contemporary transfers do not respond strongly to the cycle; however, they do respond to the lag (previous quarter), where there is a strong counter-cyclical relationship. On the other hand, it is determined that most of the important social programs have a negative relationship with the lagged quarterly production. This implies that, when production slows down, there is an increase in spending on social programs in the following quarter. We conclude that, in Costa Rica, social programs, due to their cyclicality, have had the potential to reduce the negative impacts of economic shocks on the most vulnerable populations.

Keywords: GOVERNMENT; ECONOMIC FLUCTUATIONS; GROSS DOMESTIC PRODUCT; SOCIAL TRANSFERS; ECONOMIC CYCLE; PUBLIC EXPENDITURE; CICLOS ECONÓMICOS; GASTO PÚBLICO; GOBIERNO; FLUCTUACIONES ECONÓMICAS; PRODUCTO INTERNO BRUTO; TRANSFERENCIAS SOCIALES (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2018
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