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On the determinants and interrelationship of components of government spending
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Obeng, Samuel K. (2022) On the determinants and interrelationship of components of government spending. Review of Development Economics, 26 (4). pp. 2414-2435. doi:10.1111/rode.12921 ISSN 1363-6669.
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Official URL: http://dx.doi.org/10.1111/rode.12921
Abstract
The paper examines the determinants and interrelationship of components of government spending using data for up to 142 countries over the period 1990–2017. We make use of two-way fixed effect estimator with Driscoll-Kraay standard errors, which accounts for cross-sectional dependence and a system generalized method of moments estimator to examine the determinants of components of spending. We then adopt the seemingly unrelated regression estimation technique to examine the interrelationship between government spending types. From our results, there is little evidence of Wagner's Law as the coefficient of income is negative and statistically significant for most measures of spending. Further, we find that a reduction in overall government spending tends to reduce the share of almost all components of government spending except spending on economic services, non-productive spending, and spending on transfers. In examining the interrelationship between government spending types, we find that government spending types under the Classification of Functions of Government (COFOG) classification, which may be described as “pure public goods” and “merit public good provision,” have complementary relationships. However, government spending on pure public good vs merit public goods, pure public goods vs economic services, and pure public goods vs transfers could be considered substitutes.
Item Type: | Journal Article | ||||||||||
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Subjects: | H Social Sciences > HJ Public Finance | ||||||||||
Divisions: | Faculty of Social Sciences > Economics | ||||||||||
Library of Congress Subject Headings (LCSH): | Expenditures, Public , Finance, Public , Fiscal policy, Program budgeting | ||||||||||
Journal or Publication Title: | Review of Development Economics | ||||||||||
Publisher: | Wiley-Blackwell Publishing, Inc. | ||||||||||
ISSN: | 1363-6669 | ||||||||||
Official Date: | 11 October 2022 | ||||||||||
Dates: |
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Volume: | 26 | ||||||||||
Number: | 4 | ||||||||||
Page Range: | pp. 2414-2435 | ||||||||||
DOI: | 10.1111/rode.12921 | ||||||||||
Status: | Peer Reviewed | ||||||||||
Publication Status: | Published | ||||||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||||||
Date of first compliant deposit: | 19 October 2022 | ||||||||||
Date of first compliant Open Access: | 19 October 2022 |
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