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What Do OECD Countries Cut First When Faced with Fiscal Adjustments?

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Following the present scale of fiscal imbalances in developed countries, significant fiscal consolidation will be inevitable in the coming years. Fiscal discipline will require cuts in
government expenditure, leading to trade-offs between different components of government
expenditure. In this article, we explore the relationship between components of government
expenditure and government size during the period 1970-2007 for a sample of 25 developed
countries to shed light on how fiscal discipline might influence public spending composition in
the coming years. Using the Pooled Mean Group estimation we find that fiscal adjustments
protect functions that have both a social and productive character, such as education and
health spending. In addition, the most productive spending, that related to transport and
communications, is also isolated from budgetary cuts. This result shows evidence of
governments reacting to the voter's increasing realization that reducing productive expenditures
harms long-term economic growth by striking a balance between utility and economic-growthenhancing
expenditure.

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Informasi Detail

Judul Seri

Southern Economic Journal

No. Panggil

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Penerbit

: Southern Economic Association., 2011

Deskripsi Fisik

Southern Economic Journal, 77(3), 753-775

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

ADMINISTRASI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati

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