Social spending and automatic stabilizers in the OECD

J. Darby, J. Melitz

Research output: Contribution to journalArticle

55 Citations (Scopus)

Abstract

The macroeconomic literature on automatic stabilization tends to focus on taxes and dismiss the relevance of government expenditure except for unemployment compensation. Our results go sharply contrary to this view. We engage in an empirical analysis of 21 OECD countries from 1982 to 2003 and find that age and health-related social expenditure as well as incapacity and sick benefits all react to the cycle in a stabilizing manner. While possibly new in the macro literature, this conforms to many results in studies in labour economics. The policy implications are broad since much previous analysis of discretionary fiscal policy rests on official figures for automatic stabilization. There are also major implications for efforts to incorporate automatic fiscal policy in simulation models.
LanguageEnglish
Pages715-756
Number of pages42
JournalOxford Review of Economic Policy
Volume23
Issue number56
DOIs
Publication statusPublished - Oct 2008

Fingerprint

fiscal policy
OECD
stabilization
public spending
empirical analysis
macroeconomics
unemployment
expenditure
labor
economics
simulation
Social spending
Automatic stabilizers
Stabilization
Fiscal policy
health
policy
tax
analysis
Unemployment compensation

Keywords

  • social spending
  • economic stabilisers
  • oecd
  • economic development

Cite this

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Social spending and automatic stabilizers in the OECD. / Darby, J.; Melitz, J.

In: Oxford Review of Economic Policy , Vol. 23, No. 56, 10.2008, p. 715-756.

Research output: Contribution to journalArticle

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