Current Spending Research Articles

Regional per capita income inequality and fiscal policy in Mexico, 1989–2021

AbstractIn this paper, we use trends in GDP gaps per capita or relative GDP per capita indicator as an aggregate alternative measure to show regional per capita income inequality between the states of Mexico. The indicator compares each state's gross domestic product per capita (GDPpc) with the annual average of each year and 2019; this allows for evaluating growth performance before and after the COVID-19 pandemic. The econometric method is a spatial dynamic panel, and the convergence–divergence model is conditioned to the behavior of the fiscal policy followed in each state: The fiscal policy indicators are current expenditure and public investment. In general, it is concluded that the amounts of current spending and public investment, in an active fiscal policy context, tend to favor states with higher relative per capita income, which is why an increase in regional inequality is observed. However, it tends to affect low-income regions more, with higher ratios of current spending and investment to GDP, which reduces regional inequality. Therefore, the short-term effects of active fiscal policy to reduce regional disparities can be neutralized.

Fuel Subsidy and Education Sector Financing in Nigeria: A Short-run Adjustment to Equilibrium Approach

This study examined the impact of fuel subsidy on education sector financing in Nigeria from 1990 through 2023. Annual data were obtained from the Nigeria Petroleum Corporation and World Development Indicators, (WDI) on variables such as fuel subsidy, government expenditure on education sector, Oil Revenue, pump price of Premium Motor Spirit and secondary school enrolment in Nigeria. A bound cointegration test and ECM were employed. Granger test for causality was also used to ascertain the direction of causation in the series. The estimated error correction term, ECT (-1) is significant. There is no causal relationship from fuel subsidy to education sector financing. However, education sector financing granger causes fuel subsidy. Premium Motor Spirit and education sector financing were found to granger-cause each other. The study recommends that government should ensure that fuel subsidy is not allowed to deprive education of its fair share of government spending, given that current spending on the sector has been established to have implication for the sectors growth in the future years.

Optimising HIV spending in 12 eastern European and central Asian countries: a modelling study

The eastern European and central Asian (EECA) region has the fastest growing HIV epidemic globally. We aimed to identify how HIV resources could be allocated for maximum health impact. Between Aug 1 and Dec 23, 2022, allocative efficiency analyses were undertaken for 12 countries in the EECA region (Albania, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kosovo, Kyrgyzstan, Moldova, Serbia, Tajikistan, and Uzbekistan) using HIV epidemic models developed with Optima HIV. Country models were calibrated to demographic, epidemiological, and programmatic data and validated by national teams. Three scenarios were projected from 2023 to 2030: status quo (continued 2021 spending on HIV programmes); optimised allocation of different spending envelopes to minimise HIV infections and deaths; and achieving 95-95-95 UNAIDS targets by 2030. Aggregated across the 12 models, HIV infections attributable to sexual transmission were estimated to surpass those attributable to transmission through injecting drugs in 2018, with male-to-male sexual transmission accounting for a continuously increasing share. In the status quo scenario, there were an estimated 111 520 (95% CI 28 960-208 270) new HIV infections and 34 530 (17 280-57 410) HIV-related deaths between 2023 and 2030. Aggregated optimisation results suggest that 35 860 (32%) of 111 520 new HIV infections and 9170 (27%) of 34 530 HIV-related deaths could be averted from 2023 to 2030 compared with the status quo, by prioritising antiretroviral therapy and targeted key population programmes. For ten countries, achieving 95% diagnosis was projected to not be possible with the current budget envelope, and for seven countries, this target could require more than three times the current spending. Compared with the status quo, achieving 95-95-95, or as close as possible, could avert 70 880 (64%) of 111 520 new HIV infections and 18 890 (55%) of 34 530 HIV-related deaths from 2023 to 2030. Targeted key population programmes should remain high priorities in the EECA region. Achieving 95-95-95 will require more emphasis on implementing appropriate modes of service delivery that reduce the gap in diagnosis and treatment coverage for people living with HIV. The Global Fund to Fight AIDS, Tuberculosis and Malaria. For the Russian translation of the summary see Supplementary Materials section.

Social Capital, Government Expenditures, and Growth

Abstract This paper shows that social capital increases economic growth by raising government investment in human capital through better political incentives and selection. We provide empirical evidence that a greater share of output is spent on public education where social capital is higher, both across countries and across U.S. states. We develop a theoretical model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, social capital alleviates myopic political incentives to underinvest in human capital. It also helps voters select politicians who ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility.

Does the gender dissimilarity of female mayors with their political government team affect municipalities’ budgets? Evidence from Spain

ABSTRACT Recent research has considered whether the growing presence of women in political institutions has affected public budgets. This study takes a different gender perspective. The aim is to assess how gender dissimilarity between female mayors and their government teams can affect municipal budgetary policies. We use data from Spanish municipalities with more than 20,000 inhabitants in the period from 2004 to 2018, a dynamic regression model and take into account the possible moderating effect of ideology. Our main findings are that gender dissimilarity of female mayors increased current social spending and reduced nonsocial spending in line with female gender preferences, while it decreased tax revenues. However, when we analyze only the years of economic growth, we observe that the gender dissimilarity of female mayors increased tax revenue in accordance with their gender preferences. We also see that the interaction between right-wing ideology and the dissimilarity of female mayors substantially and significantly accentuated the decrease in nonsocial spending. We confirm our findings in different population segments.

Reprint of “Sovereign debt and economic growth when government is myopic and self-interested”

We examine how a sovereign’s ability to borrow abroad affects the country’s growth and steady-state consumption when the government is both myopic and self-interested. Surprisingly, government myopia can increase a country’s access to external borrowing and extend the government’s effective horizon, giving it a stake in incentivizing private production and savings despite its self-interest. In a high-saving country, the lengthening of the government’s effective horizon can incentivize it to tax less, resulting in a “growth boost”, with higher steady-state household consumption than if it could not borrow abroad. However, in a country that saves little, the government may engage in repressive tax policies to channel domestic savings into government bonds. This increases future governments’ costs of default, and in turn enhances current debt capacity and spending, but can lead to a “growth trap” where steady-state household consumption is lower than without government’s access to external borrowing.

The Role of Government Spending in Developing the Productive Capacity of The Iraqi Economy

The research seeks to demonstrate the impact of government spending on the productive capacity of the Iraqi economy, as the continuous increase in the volume of public spending and the adoption of the planned deficit method in the budgets of various years must reflect positively on the productive capacity of the country, so the relationship between the two variables was estimated according to the autoregressive distributed lag model ( ARDL) as it shows the relationship in the short and long terms and for the period 2004-2022, and among the results obtained is that current spending has a negative impact on the productive capacity index. This means that current spending is unproductive within its vicious circle, that is, money leaks out without generating economic returns for the country. Investment spending has a positive impact on the productive capacity index, as the average investment spending during the research period amounted to approximately (20%) of government spending, which is a very low percentage that was reflected in the weakness of the investment-based structures of the Iraqi economy, and this is what made the productive capacity index of the Iraqi economy It records a low percentage, reaching its best levels (35%), and this is consistent with the weak allocation of financial resources in investment aspects. What supports the analysis is the relationship test, which shows us that investment spending has a positive and significant effect on production capacity, but its parameter reached (0.07), which is a very low percentage. It has almost no effect. However, if a large percentage of financial resources were directed towards investment areas, this would develop projects, increase their ability to produce and productivity, and achieve high rates of GDP growth.
 Therefore, the research recommends the necessity of directing government spending towards productive sectors in order to improve production capabilities and achieve sustainable development comparable to developed countries, as well as periodically monitoring and evaluating the extent of the productivity of public spending in various economic sectors in order to make it more effective.

Public Spending Composition and its Implications for Economic Growth and Poverty Reduction in Pakistan: A Dynamic Time Series Analysis

This study explores the dynamics of government spending composition in Pakistan, focusing on its impact on economic growth and poverty reduction. The study analyzes subcategories of public expenditures, including current and capital spending, and functional classifications such as education, health, physical infrastructure, and defence. Using the ARDL framework, the study finds a long-run relationship between public spending and economic growth, with capital spending positively impacting GDP growth while current expenditures have a negative effect. Education and physical infrastructure expenditures contribute positively to economic growth, while health expenditures negatively impact the long run. The study also disaggregates health and education expenditures to analyze their economic impacts. Expenditures on research and curriculum development in education and subsidiary transportation services positively affect economic growth. However, primary and secondary education expenses and tertiary education expenditures do not show a significant growth impact. Similarly, expenditures on hospital services, patient health services, and research and development in health do not contribute to economic growth. The study concludes that the composition of public expenditures is related to poverty reduction, with total government spending and investments in education, health, and physical infrastructure playing a significant role in poverty reduction.

PROJECTION OF MEDICAID SPENDING ON PEOPLE WITH ALZHEIMER’S DISEASE AND OTHER RELATED DEMENTIAS

Abstract As the US population is aging, the number of people with Alzheimer’s Disease and Other Related Dementias (ADRD) is increasing. People with ADRD have high expenditures on medical care and long-term services and supports (LTSS). Medicaid is the largest single payor for LTSS, however, the literature on the demographic trends and epidemiology of people with ADRD does not offer projections of Medicaid spending. The goal of this study was to develop an estimate for future Medicaid spending for people with ADRD for the state of Pennsylvania. The approach taken was to develop a demographic projection of the size of the older population, then estimate the fraction of people with ADRD who are eligible for Medicaid. Next, we used estimates of current spending trends to project future spending through 2025. Nearly all Medicaid participants with ADRD are dually eligible for both Medicaid and Medicare, however, Medicare managed care encounter data were not available for analysis. Thus, the prevalence of ADRD was constructed using Medicaid and Medicare fee-for-service (FFS) claims data. Two alternate estimates of the prevalence of ADRD among Medicare managed care enrollees were used (same as Medicare FFS, or slightly lower). Estimates were generated under several growth rates in per person spending on home and community-based services (HCBS). The results shows that growth in HCBS spending is the largest factor in predicting spending, leading to estimates ranging from $2.8 billion to $3.5 billion. Future research will extend the model to additional years.

PROSPECTS OF ECONOMIC STANDORT AMID THE CRISIS OF THE «TRAFFIC LIGHT» COALITION POLICY IN GERMANY

By the fall of 2023, the German government coalition (December 8 marked two years since the start of its activities) had developed a number of important economic bills. They were designed to increase the competitiveness of the German economic space in the context of polycrisis challenges – pandemic, energy, migration, geopolitical. But the economic policy of the Cabinet of Ministers also found itself in crisis. It acquired clear outlines after the German Constitutional Court in mid-November overturned the government’s decision taken at the end of 2021 to transfer 60 billion euros of loan funds intended to overcome the consequences of the coronavirus to the Climate and Transformation Fund to finance current government spending. The author analyzes the consequences of this decision for the planned reform steps; assesses the prospects for the formation of the state budget; characterizes the current state of the German standort, as well as the prospects for the deindustrialization of its energy-intensive sector.

Can Local Government Mergers Reduce Costs When Capital Expenditures Are Low? Evidence from Court Mergers

Local government mergers, motivated by promises of cost savings via economies of scale (EoS) and reduced duplication of function, often fail to produce the anticipated savings. An inability or unwillingness to reduce personnel costs is often offered as a reason for this outcome. We explore this explanation by estimating the expenditure effects of court mergers in California. Our main result is that current judicial spending (total expenditures minus capital expenditures) increases significantly following consolidation. This is partially explained by a sustained increase in salaries paid to full-time workers. The number of workers increases in the years immediately following merger however over the long-term merger has no effect on employment levels, suggesting that mergers change the composition of the workforce. These findings have implications for all local governments that provide labor-intensive services, if mergers are to reduce expenditures officials must be willing to make difficult personnel decisions.

Hemophilia in Jordan: An Economic Burden Dilemma of Rare Disease

Jordan is an upper-middle-income country with high expenditures on pharmaceuticals. The development of new rare disease (e.g. hemophilia) therapies has encountered significant obstacles with respect to economic the cost of the disease and treatment. The aim of this overview was to estimate current annual spending on hemophilia treatment in Jordan and estimate the financial impact of adapting a new medication (Emicizumab) recently used for treating hemophilia patients in Jordan. Methods: based on the literature review, direct medical costs were quantified, required items’ costs from the actual practice in Jordan were elicited from an expert panel, and a focus group meeting with the same was conducted one month later to determine the current estimated number of hemophilia Patients in Jordan, identify current treatment on demand quantities and their prices. All related medical costs were also identified (e.g. bleeding, the estimated number of hospital days, and/or Intensive Care Unit per bleeding episodes). Estimation of the annual consumption of current on-demand treatment quantities and cost were calculated and compared with scenarios of adding the new therapy (Emicizumab). Results: showed that the financial impact of using Emicizumab S.C. instead of Recombinant Factor VIIa I.V. on the budget of the Jordanian government will be 425,747 JOD ($601,338) annually. Conclusions: the economic advantages of a new hemophilia treatment might be very substantial for patients.

Evaluation of Caesarean Expenditures of Households in Benin

After years of effort, sub-Saharan Africa has seen little improvement in maternal and neonatal health indicators. Providing all women with access to emergency obstetric care is an accepted effective strategy to reduce maternal and neonatal mortality. In many African countries such as Benin, the cost of health care is a major obstacle to access obstetric care. The aim of this study was to evaluate the caesarean section expenditures of households in Benin and to determine the strategies for obtaining the necessary resources to meet the caesarean section expenditures of the households. Three hospitals and 505 households in the Littoral region were sampled, and data were collected by applying a questionnaire to the people accompanying the woman to the hospital. The socioeconomic status of the households was evaluated using a wealth index created by principal component analysis. Factors significantly associated with expenditure were determined using multivariate linear regression analysis. Despite the free caesarean section policy in effect, households spend a median of US$180.60 (IQR: 148.13–222.35) for a caesarean section, of which 76.0% are direct costs, 17.0% are indirect costs, and 7.0% are opportunity costs. Expenditures vary considerably depending on the residence area of the household, the presence of complications, the presence of health insurance, the socioeconomic class of the households, the education level, and working status of the woman. Finally, households use 11 strategies to obtain funds to pay for the caesarean costs. While poor households resort to foreign aid, asset sales, and/or current spending cuts, the rich use their income and/or savings to cover their caesarean section expenses. The results favour the adoption of a mechanism for direct exemption of the costs of caesarean sections payable by the poorest households, in addition to the current free caesarean policy.

The effect of open space maintenance spending on house prices

AbstractWe study the effect on housing values of cutting funding for the maintenance of local parks and recreational areas. It is the first study we find on house prices and park maintenance spending, and only the second open space study we find that uses regression discontinuity. We study tax votes with exogenous timing for renewing current expense spending on parks and recreation, adding to the vibrant literature on house price capitalization of environmental amenities. We find that otherwise similar communities that barely vote to cut taxes suffer an 11% drop in house prices, compared to communities that barely vote to renew tax funding. The capitalization discount grows to 13% and 16% in later periods. Voting against spending saves $70 a year for a typical house but cuts house values by over $30,000. We find stronger effects for large tax levies and more expensive houses.

Are special districts strategic complements or strategic substitutes?

AbstractWhat happens to general‐purpose local government spending for service provision when a special district enters the public service market? Theoretically, special districts can act either as complements by supplementing existing service provision spending or as substitutes by supplanting current service provision spending. We find a substitution effect using fixed effects regression on urban counties in the United States from 1972 to 2017. Special districts replace spending for public service provision by county governments; however, we find no similar result for municipal governments. But the results are nuanced—findings are confined mainly to public services that tend to cover large land areas, like fire protection, sewerage, and solid waste management. Furthermore, we find evidence that day‐to‐day operations drive observed substitution, and that county size is an important factor depending on the functional service area.

How much do development partners invest in disaster risk reduction? A data analysis

SummaryMotivationMost weather‐related disasters occur in the world's poorest countries, which have the least capacity to cope. Due to the absence of a clear classification of DRR aid, donors and recipient countries have not known the amount of DRR aid flowing or its effectiveness in terms of supporting disaster risk management in developing countries.PurposeIn 2018, the OECD DAC created a new policy marker for DRR to help donor countries to monitor and report the progress made on mainstreaming DRR into their development activities. Drawing on this DRR marker, this study identifies trends and patterns as well as limitations in the DRR mainstreaming process to guide donor countries to successfully deliver the DRR goals.Methods and approachWhen reporting to the OECD DAC, donors are asked to provide information on the purpose of individual projects/programmes, and screen against all policy markers in the reporting system. Using this data, this study conducted an in‐depth analysis of donor countries' development portfolios to provide a comprehensive and granular picture of the funding streams and practices concerning DRR.FindingsThis study revealed that current spending on DRR remains a tiny fraction of total development aid. Even after the creation of the DRR marker, which raised donors' awareness of the importance of integrating DRR into development planning, no substantial increase in DRR funding has been made. This implies that most official development assistance from DAC members still fails to consider DRR in any meaningful way.Policy implicationsImportant areas for improvement include a more comprehensive understanding of disaster risk, increased funding for activities that principally target DRR, financial stability, and further integration of DRR and climate change adaptation into development projects.

A global conservation basic income to safeguard biodiversity

AbstractBiodiversity conservation supporting a global sustainability transformation must be inclusive, equitable, just and embrace plural values. The conservation basic income (CBI), a proposed unconditional cash transfer to individuals residing in important conservation areas, is a potentially powerful mechanism for facilitating this radical shift in conservation. This analysis provides comprehensive projections for potential gross costs of global CBI using spatial analyses of three plausible future conservation scenarios. Gross costs vary widely, depending on the areas and populations included, from US$351 billion to US$6.73 trillion annually. A US$5.50 per day CBI in existing protected areas in low- and middle-income countries would cost US$478 billion annually. These costs are large compared with current government conservation spending (~US$133 billion in 2020) but represent a potentially sensible investment in safeguarding incalculable social and natural values and the estimated US$44 trillion in global economic production dependent on nature.

Using the Induced Response Function to Measure and Analyze the Impact of Fiscal Policy Shocks on Some Macroeconomic Variables

Purpose: The purpose of this research is to use the induced response function to measure and analyze the reality of the general budget and the trade balance and the impact of the flexible fiscal policy on some macroeconomic variables. Theoretical framework: The public finances after 2003 in Iraq were oriented towards consumerism, far from the orientations and objectives of economic policy, through the increase in commercial expenditures at the expense of investment expenditures, in contrast to the increase in the volume of imports of goods and services with the dominance of oil exports over the volume of total exports, and these factors Together, they made the flexible fiscal policy unable to achieve its goals, foremost of which is economic stability. Design/methodology/approach: The study starts from the hypothesis. The fiscal policy shocks were deliberately created by the government as part of strategic plans that serve its policy, philosophy, and goals it seeks, or as preventive plans against undesirable events, or may occur within treatment plans in response to certain pressures. To achieve the objectives of the study and to prove or refute the mentioned hypothesis, the research relied on the descriptive analysis method To reach the required results. Depending on the period from 2003 to 2018 (Iraq is a case study). Findings: The shock that was occurring in the financial policy tools were fabricated by the decision-makers to meet the needs of the security side, which was reflected in its shadows on the increase in current spending resulting from the wages and salaries system and allocations directed to the security system to achieve stability and control the security situation, in addition to the political repercussions that increased the level of employment or Operation to achieve other goals. Research, Practical & Social implications: Future studies can look at measuring and analyzing the impact of fiscal policy shocks on macroeconomic variables or their repercussions on economic, social, and political policies. Originality/value: This study contributes to the literature related to fiscal policy by analyzing the results of the impact of financial shocks on some macroeconomic variables, and provides a practical and applied perception of the role played by the fiscal policy methodology in Iraq.

Are Budget Neutral Income Floors Fiscally Viable in Sub-Saharan Africa?

AbstractWe use microsimulations to assess whether budget-neutral universal income floors are fiscally viable in twelve Sub-Saharan African countries. We consider three universal basic income scenarios of decreasing levels of generosity: poverty line, average poverty gap and current spending on transfers and subsidies per person. The first two may not be viable because the required increase in taxes to fulfil budget neutrality is significant.

MANAGEMENT EVALUATION METHOD FOR PLANS, PROGRAMS AND PROJECTS OF MUNICIPAL DECENTRALIZED AUTONOMOUS GOVERNMENTS (GADM) OF ECUADOR

The Territorial Development and Ordering Plan (PDOT) is the responsibility of the Decentralized Autonomous Governments GADs at their different levels of government so that the State can order the territory and transfer resources, this being the main budgetary source; on the other hand, it is the financing of the GADs through their own resources (property taxes, rates, and special contributions for improvements, among others), frequently destined for current spending and specific requests from sectors; frequently investments that do not respond to the planning or real needs identified in the diagnoses and participatory processes of the territory. The present investigation is part of the regulations and technique that is mandatory for the Municipal GADs, applied to an evaluation through a case study (PDOT 2020 - 2030 of the GADM of Riobamba) in terms of management procedures and prioritization in which consider some parameters that show the progress of these planning tools. The law of scarcity is also applied, which arises from the insufficiency of various resources that are considered essential for the human being, which allows prioritizing investment based on planning and available budget. The evaluation carried out strengthens and improves the actions of public institutions, helping in parallel to respond to the real demands of their territories.