Abstract
The financial crisis of 2008 affected the whole world and it had a negative impact on economies. The effects of the crisis are still experienced in several nations. Especially high budget deficits, public debt and unemployment problems caused a heated debate on public spending that was increased to prevent economic recession in the post-crisis era. This study aims to discuss public expenditure efficiency in the wake of global financial crisis. The study utilized a database including the indicators of; Public Expenditures (as a dependent variable), Gross Domestic Product (GDP), Gross Domestic Product Growth Rate, Unemployment Rate, Public Debt, Fiscal Deficit, Human Development Index (HDI). HDI. We used panel regression analysis for 28 EU countries, and time series analysis for the the top 10 countries in terms of per capita income for the period of 2000-2015. The following results were obtained: The high public spending did not affect the indicators used in this study in a positive way.
Highlights
The crisis that commenced in the United States of America (USA) in 2007 and deepened in 2008 first expanded to the countries that were US trade partners and became a global crisis
The impact of public expenditures on macroeconomic indicators and Human Development Index (HDI) were analyzed with panel estimation method for EU-28 countries
This study presents a foundation by analyzing and presenting a critique of the theoretical constructs and empirical results to determine the extent to public expenditures affected to macroeconomic indicators and HDI in EU countries and the countries with the best performance after the financial crisis
Summary
The crisis that commenced in the United States of America (USA) in 2007 and deepened in 2008 first expanded to the countries that were US trade partners and became a global crisis. The impact of public expenditures on selected macroeconomic indicators (public debt, budget deficit, unemployment, GDP growth) and Human Development Index (HDI), which is commonly used to determine the economic development level of a country, were attempted to be identified between the pre-crisis period and today in 28 European Union countries (EU-28). For this purpose, annual data for 2000 – 2015 period were used. This study presents a foundation by analyzing and presenting a critique of the theoretical constructs and empirical results to determine the extent to public expenditures affected to macroeconomic indicators and HDI in EU countries and the countries with the best performance after the financial crisis
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