Cyclical Bias in Government Spending: Evidence from the OECD

Zvi Hercowitz () and Michel Strawczynski

Working Papers from Tel Aviv

Abstract: This paper studies the role of business cycles in the phenomenon of increasing government spending/GDP ratios in the OECD countries. Using a panel data set covering the 1975-1995 period, the main finding is that the prolonged rise in this ratio is linked to a cyclical bias; the spending/GDP ratio increased during recessions and stayed approximately constant during expansions. Also analyzed are the cyclical changes in the composition of government spending (goods and services, transfers and subsidies, and capital expenditure), in tax revenues, and a possible link between the cyclical bias and an index of government weakness.

Keywords: FISCAL POLICY; PUBLIC EXPENDITURES; GOVERNMENT (search for similar items in EconPapers)
JEL-codes: E62 H50 H60 (search for similar items in EconPapers)
Pages: 24 pages
Date: 1999
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:teavfo:6-99

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