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Impulse and time persistence of disaggregate welfare expenditure on growth in the EU

Alessandro Crociata (), Massimiliano Agovino, Donatella Furia (), Giacomo Osmi (), Nicola Mattoscio () and Massimiliano Cerciello ()
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Alessandro Crociata: Gran Sasso Science Institute (GSSI)
Donatella Furia: University “G. D’Annunzio” of Chieti-Pescara
Giacomo Osmi: University “G. D’Annunzio” of Chieti-Pescara
Nicola Mattoscio: University of Naples “Parthenope”
Massimiliano Cerciello: University of Naples “Parthenope”

Economia Politica: Journal of Analytical and Institutional Economics, 2020, vol. 37, issue 1, No 2, 13-38

Abstract: Abstract In a post-industrial and globalised world, assessing the impact of Welfare State Expenditure (WSE) on economic growth has become an issue of growing interest. The debate is still open in the literature, as no consensus has currently been achieved. We argue that disaggregating WSE, the positive/negative performance dichotomy of welfare policies may be overcome. Departing from this intuition, we apply PVAR techniques in order to investigate the endogenous interactions between economic growth (proxied by GDP) and WSE, measured as single social expenditure items, using data gathered from the European System of Integrated Social Protection Statistics. Our results confirm both the positive and the negative impact of WSE on growth. Moreover, we show the existence of the different impulse responses and time persistence patterns for disaggregated WSE items. Our results imply that further research should take into account the composition of WSE in addition to its extent.

Keywords: Welfare state; Disaggregated social spending; Growth; PVAR techniques; Impulse response; Time persistence (search for similar items in EconPapers)
JEL-codes: C4 C8 H0 H1 I2 I3 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s40888-019-00156-6

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