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Pressures to increase public expenditure and patterns of procyclical expenditure

Abbott, Andrew; Jones, Philip

Authors

Andrew Abbott

Philip Jones



Abstract

This paper draws on the literature that explains why governments spend procyclically, to predict the pattern of cyclical expenditure across government budgets. Procyclical expenditure increases at a faster rate than income in economic upturns and falls at a faster rate in recessions. The more politicians indulge pressures to increase expenditure in an economic upturn, the more they find it difficult to sustain expenditure in a recession. In this paper, differences in politicians' willingness to increase expenditure in an economic upturn are relevant when predicting patterns of cyclical expenditure across budgets. Predictions are tested with reference to expenditures from government budgets in 23 OECD countries (over the period 1995-2006). Central government capital expenditure and sub-central government expenditure are systematically more procyclical than expenditures from other budgets.

Citation

Abbott, A., & Jones, P. (2014). Pressures to increase public expenditure and patterns of procyclical expenditure. Economic issues, 19(2), 39-53

Journal Article Type Article
Acceptance Date Jul 9, 2014
Publication Date 2014-09
Deposit Date Oct 28, 2015
Publicly Available Date Nov 23, 2017
Journal Economic issues
Electronic ISSN 1363-7029
Publisher Nottingham Trent University
Peer Reviewed Not Peer Reviewed
Volume 19
Issue 2
Pages 39-53
Keywords Procyclical expenditure
Public URL https://hull-repository.worktribe.com/output/380426
Publisher URL http://www.economicissues.org.uk/Files/2014/214A&J.pdf
Additional Information This is an article published in Economic issues, 2014, v.19 issue 2.

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