Introduction to Symposium on Government Spending

Abstract

This symposium features three papers that investigate various aspects of government spending. the papers also share common ground in the considerable attention paid by each to international issues. Beyond that, the papers are quite different. They vary considerably in the mix of theory and empirical evidence as well as in the specific aspects of government spending that are investigated. the paper by Darrel Cohen utilizes techniques from the spectral analysis of time series to characterize seasonal, cyclical, and long-run properties of various measures of U.S. government spending; in addition, spectral techniques are combined with an intertemporal optimizing model of a representative consumer to shed light on the issues of the degree of direct substitution between government and private consumption spending in each of twelve major economies. the paper by Louise Sheiner uses cross-country data to address the question of whether conventional projections of a country's future health care expenditures are based on a faulty assumption that relative health spending by age remains constant. This paper is quite topical given impending demographic changes and related projected impacts on government outlays on health and retirement programs in many countries. the paper by Michele Cavallo develops a theoretical model and utilizes a calibration exercise to examine the effects on the current account balance of changes to different types of government spending, in particular expenditures on goods and expenditures on hours worked.