What do OECD countries cut first at a time of fiscal adjustments? A dynamic panel data approach

Ismael Sanz and Francisco J. Velazquez ()

University of California at Santa Barbara, Economics Working Paper Series from Department of Economics, UC Santa Barbara

Abstract: Following the present atmosphere of budgetary cuts we analyze the effects of fiscal consolidation on the composition of government expenditures by functions. Using a dynamic voter group decision model and exploiting the panel structure of the dataset – 26 OECD countries over the period 1970-1997- by GMM estimation we find that fiscal adjustments protect social expenditure. Nevertheless, we find that among social expenditure, those being also productive such as education and health are even more protected than those not being productive as social welfare expenditure. Moreover, fiscal adjustments do not fall primarily over the most productive expenditure, transport and communications, but over defense and economic services.

Keywords: Fiscal consolidation; Composition of government expenditure; Dynamic panel data; voter group decision model (search for similar items in EconPapers)
Date: 2003-12-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.escholarship.org/uc/item/4j744960.pdf;origin=repeccitec (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cdl:ucsbec:qt4j744960

Access Statistics for this paper

More papers in University of California at Santa Barbara, Economics Working Paper Series from Department of Economics, UC Santa Barbara Contact information at EDIRC.
Bibliographic data for series maintained by Lisa Schiff ().