The Effects of Social Spending on Economic Activity: Empirical Evidence from a Panel of OECD Countries

• Autores: Davide Furceri, Aleksandra Zdzienicka
• Localización: XVIII Encuentro de economía pública, 2011
• Idioma: español
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• Dialnet Métricas: 5 Citas
• Resumen

  • The aim of this paper is to assess the effects of social spending on economic activity. Using a panel of OECD countries from 1980 to 2005, the results show that social spending has expansionary effects on GDP. In particular, we found that an increase of 1% of social spending increases GDP by about 0.1 percentage point, which, given the share of social spending to GDP, corresponds to a multiplier of about 0.6. The effect is larger in periods of severe downturns.

    Among its subcategories, social spending devoted to Health and Unemployment benefits are those that have greatest effects. Social spending also positively affects private consumption while has negligible effects on investment. The empirical results are economically and statistically significant, and robust.