Public Spending, Pro-Poor Growth and Poverty Reduction in Tunisia: A Multilevel Analysis

Abstract

One of the main goals of this study is to assess to what extent public spending contribute to enhance economic growth and poverty reduction. For this purpose, multilevel analysis approaches are followed to capture the likely effects of some public expenditure on growth, inequality, and poverty. One of the most important results of this study is that policies aimed at enhancing the purchase power of the poor are more effective in reducing poverty than policies aimed to improve human capital in the short run. Yet, in the long run, the second route enables to push up economic growth and to boost poverty reduction. These results give evidence that there are some trade-offs between short and long run. Thus, policies like conditional cash transfers are needed in the short run to smooth the negative impact of the policy changes that enhance economic growth and poverty reduction in the long run.