Determinants Of Public Expenditure Research Articles

Determinants of Public Expenditure on Education in India: An Empirical Analysis

Determinants of Public Expenditure on Education in India: An Empirical Analysis

Decentralisation or patronage: What determines government's allocation of development spending in a unitary country? Evidence from Bangladesh

This paper contributes to the decentralisation and distributive politics literature by empirically investigating the determinants of public expenditure at the sub-national level in Bangladesh. We argue that fragmentation in a unitary developing country may not channel higher resources to local areas. Political motives may instead play a significant role in the allocation process. Using panel data methods and a novel dataset on government's district-wise allocation of annual development expenditure in Bangladesh covering the period from 2005 to 2009, the analysis focuses on the impact of local government fragmentation and tests key political distribution models (the core voter hypothesis, the swing voter hypothesis, and the political alignment theory). The results show that local government fragmentation does not have any significant impact on public spending at the district level. However, the core vote share, local elected representative's political alignment with the ruling party, and the raw number of ministers from a district are all significantly associated with higher expenditure allocation. No evidence was found in support of the swing voter hypothesis. Overall, the findings suggest that political motives matter and that the allocation of developing spending is significantly influenced by political patronage. This may be a signficant obstacle to SDGs progress, as development spending may not be governed by resource delivery mechanisms that effectively target the poor.

Spending trends on neuropsychiatric drugs in Minas Gerais, Brazil: is the offer of anti-parkinson drugs increasing?

Neuropsychiatric drugs are used for a wide variety of neurological and psychiatric conditions. This article aims to analyze the trend and determinants of public expenditure of these medicines in Minas Gerais, from 2010 to 2017. Data from the Integrated Materials and Services Administration System (SIAD) database were used to estimate volumes of acquisition and expenditure. A breakdown analysis was performed, and the list of purchased drugs was reviewed, and the Drug Utilization technique (DU90%) applied concerning anti-Parkinson drugs. Annual expenditure dropped by 36%, from R$ 111.7 million in 2010 to R$ 40.9 million in 2017, and the determinant factors were the falling prices and volume, associated with changes in the drug mix, which favored the acquisition, on average, of more expensive products. Higher levels of expenditure for anti-Parkinson drugs stand out, however, with a significant change in the list purchased. This study contributed to a better understanding of public spending on neuropsychiatric drugs. A reduced volume can increase the risk of shortages. Regarding anti-Parkinson drugs, there is no evidence to suggest an increased supply to the population.

Socio-economic determinants of public expenditure in Africa: assessing the influence of population age structure

PurposeAfrica's population is the second largest and fastest growing in the world after Asia, and this puts African governments under great stress in terms of increased public expenditure and is faced with a low revenue generation. Hence, the need for this study. The purpose of this paper is to examine the socio-economic determinants of public expenditure in Africa by assessing the influence of population age structure using a sample of the top ten most populous countries in Africa covering period of 1989 to 2018.Design/methodology/approachThe study employed panel fully modified ordinary least square (OLS) in estimating the relevant relationship between the variables in the model. The dynamic ordinary least square (DOLS) model was also used to check the robustness of the fully modified ordinary least square (FMOLS) results.FindingsThe findings revealed that the major population age structure that influences the growth of public expenditure in Africa are population ages (0–14) and population ages (15–64), but the former poses a stronger significant influence than the latter while population ages (65 and above) has a negative and insignificant influence. Also, in terms of other socio-economic factors, self-employment has a reducing and significant influence on public expenditure. GDP per capita has a negative and insignificant influence while foreign aid and unemployment rate has an increasing influence. Finally, inflation rate and control of corruption (CC) has a negative relationship with public expenditure.Social implicationsThe study argues that an increase in the young and working population will put enormous pressure on the government in the provision of more jobs and other public infrastructures such as health care and education. In the context of African economy with a low revenue generation, public expenditure will be low and the desperately poor masses will be denied of these public infrastructures.Originality/valueSeveral studies (Jibir and Aluthge, 2019; Tayeh and Mustafa, 2011; Okafor and Eiya, 2011; Obeng and Sakyi, 2017; Ofori-Abebrese, 2012) have investigated the determinants of public expenditure using total population as a variable. However, this study is unique as it focused on the influence of population age structure on public expenditure in Africa. Also, the study incorporated other socio-economic determinants of public expenditure such as self-employment, standard of living, inflation rate, unemployment rate, foreign aid and corruption in its analytical model. To the best of our knowledge, some of these variables have not been employed in previous studies.

Institutional Determinants of Budgetary Expenditures. A BMA-Based Re-Evaluation of Contemporary Theories for OECD Countries

The article tackles the problem of the most important institutional determinants of public expenditures. Within the traditions of public choice and institutional economics, it tests several theories ranging from the fiscal commons framework, Political Business/Budget Cycle (PBC) and path dependence to veto players theory. Its novelty compared to previous research stems from an attempt to test several theories simultaneously, dealing with model uncertainty by using sensitivity analysis within the Bayesian Model Averaging framework with a vast prior structure in terms of model, g and multicollinearity dilution priors. The results confirm several hypotheses tested in the area of fiscal management across the recent decades within the group of developed economies, giving especially strong support to the tragedy of the fiscal commons and path dependence concepts, while only partial support to veto players theory. In contrast, explanations based on political budget cycle (PBC) theory are dismissed. Among other interesting findings reported in the study, Scandinavian countries turn out to be the most fiscally responsible when other institutional factors are taken into account. Similarly, contrary to other recent research into the issue of EU fiscal institutional framework, Euro area countries are characterized by limited public expenditures.

Analysis of the Determinants of Public Education Expenditures in Bangladesh

This study based on the well-known theories of public policy analysis, economics, as well as public finance through empirically exploring and examining the determinants of public expenditure on education in Bangladesh. It is postulated, for the purpose of the research that education expenditures are determined by multidimensional factors. Economic-demographic, decision-making, political, and new institutionalism theories are therefore been studied, along with the concept of education. This research identified as well as computed education expenditure by types along with levels of education as per the distribution of government budget and the education system of Bangladesh. The results disclosed that education financing policy in Bangladesh is primarily determined by the previous year’s expenditures. Indirect tax also increased the total education expenditure as percentage of GDP. This is what in line of incrementalism theory and fiscal illusion or voting bias model suggests, respectively. Furthermore, total populations and government effectiveness has the positive impact of types as well as levels of education expenditures; implying that government of Bangladesh taken under consideration only certain factors and neglects to incorporate the importance of economic, governance and educational determinants while allocating education expenditures.

Determinants of Public Expenditure in Southern States of India:Panel Data Analysis

The success of public expenditure depends on the government's efforts to ensure the effectiveness of the public expenditure with appropriate composition, but the major states in India failed to pay adequate attention. The objectives are the growth and trend of public expenditure in Southern States and to study the determinants of the growth of Public expenditure from 1990-91 to 2013-2014. In order to test trends in the revenue expenditure the tools namely panel testing have been applied for estimating the responsiveness of government expenditure to State Gross State Domestic Product (GSDP). The paper is divided into six sections. The first section is introductory in nature and the second discusses the various theoretical developments of public expenditure. Third section deals with objectives of the paper, fourth section deals with methodology. The fifth one provides the results and discussion, especially illustration of public expenditure, growth and composition public expenditure of southern states and lastly conclusions.

Analysis of the Determinants of Education Expenditures in Malaysia

Expenditure on education helps in improving the skill formation and raises the ability of individuals to produce and work. It is said to be an investment in human capital which is closely connected with the economic development. Government education spending is of great importance to national development and plays a prime role in assisting growth and knowledge deepening. The aim of this study is to build on the established theories of public policy analysis on education and to empirically investigate and analyze the determinants of public expenditure on education in Malaysia. For the occasion of this study, it is posited that education expenditure is determined by multidimensional determinants. A number of theories are therefore incorporated regarding economic-demographics and political concept which have been used in the study. The results reveal that the education policy in Malaysia is mainly determined by budget deficit and the revenue collected by the government with a significant coefficient variables of -0.22and 0.15 percent respectively. Besides, unemployment has an inverse but insignificant impact on total educational expenditures. These results imply that the Malaysian government mainly takes into account only certain factors and neglect to incorporate the importance of other factors, such as demographic and educational indicators, when allocating education expenditures. Whereas Malaysian government education expenditure doesn’t focus on the political factor which is well described by the insignificant level of 0.80 percent of the dummy election cycle variable.

Active labour market policies and the efficiency of the European Social Fund in Spanish regions

ABSTRACTActive labour market policies and the efficiency of the European Social Fund in Spanish regions. Regional Studies. This paper estimates the determinants of public expenditure on active labour market policies (ALMPs) at the regional level using panel data from a sample of the 17 Spanish regions (1989–2010). The estimations take into account endogeneity, dynamics and spatial dependence among regions. Estimations’ outcome is interpreted with the help of a simple theoretical model of intergovernmental grants. Results reveal that the European Social Fund is not effective in its aim of promoting ALMP expenditure and show that rent-seeking when regions compete to attract funds from a common pool provokes the opposite effect, which is exacerbated in the presence of imitation.

Determinants of Public Expenditure on Health in India: A Panel Data Analysis at Sub-National Level

This study explores whether political factors and fiscal capacity matter more in explaining the growth and variation in health expenditure than the state’s income in India. The findings suggest that with the widening of political participation and greater representation of diverse population groups in politics, one can see a concomitant rise in government expenditure on health, indicating state interventionism in health sector for political reasons. Government’s desire to increase health spending depends on the availability of financial resources with the states, failing which the probability of fulfilling expenditure obligations towards the sector would be low. In contrast to earlier estimates that income elasticity of health expenditure is nearly equal to or greater than one, the elasticity is found to be less than one which ranges between 0.16 and 0.59. Overall, coefficient estimates of most of these important covariates show an upward bias in terms of magnitude and precision due to the absence of unobserved control factors and of advanced robust estimation techniques.

Determinants of public expenditures for medicinal products in non hospital consumption in Slovenia

The Slovenian government aims to regulate prices for medicinal products to manage and reduce public expenditures for medicinal products. This paper aims to investigate the association between the regulated wholesale prices of medicinal products and the public expenditures for medicinal products, and to estimate regression model for public expenditures for medicinal products in the non hospital consumption. In the empirical research are included 758 regulated prices for medicinal products prescribed by the outpatients’ department on a prescription (Rp) during the years 2003–2010, which are financed from public expenditures. The correlation and regression analyses are used in order to establish the association between the regulated wholesale prices for medicinal products and the public expenditures for medicinal products. The correlation analysis confirmed a strong positive correlation of the public expenditures for medicinal products with the number of Rp or the number of boxes on the Rp prescription, a weak correlation with the wholesale prices for medicinal products and with the classification lists of medicinal products. The multiple regression analysis confirmed a positive significant impact of the wholesale price of medicinal products and the number of Rp or the number of boxes on the Rp prescription, on the public expenditures for medicinal products. The research has confirmed the association of the public expenditures for medicinal products with the regulated wholesale prices for medicinal products. It has underlined the importance of the rational prescription and use of medicinal products. The explanatory variables included in the regression model for the public expenditures for medicinal products explained up to 94% of variability in the public expenditures for medicinal products.

An Analysis of the Determinants of Education Expenditure in Thailand

This integrative study builds on the established theories of public policy analysis, economics, and public finance by empirically investigating and analyzing the determinants of public expenditure on education in Thailand. For the purposes of this study, it is posited that education expenditures are determined by multidimensional factors. A number of economic‐demographic, political, institutional, and decision‐making theories are therefore examined, together with the concept of education. This study recognizes and quantifies education expenditure by both types and stages of education according to the allocation of government budget and the education system in Thailand. The results reveal that education financing policy in Thailand is mainly determined by last year's expenditures. Industrialization also increases the total education expenditure. This is what the incrementalism theory and Wagner's Law postulate, respectively. Moreover, unemployment has an inverse impact on several types of education expenditures. The results imply that the Thai government mainly takes into account only certain factors and neglects to incorporate the importance of demographic and educational indicators when allocating education expenditures.

The political economy of cultural spending: evidence from Italian cities

We investigate the relationship between Italian municipalities’ spending on culture in the 1990s and 2000s and a number of political variables—such as a left/right dummy, an election-year dummy and a term-limit indicator—controlling, among other things, for economic and socio-demographic characteristics of the population, the level of human capital and instruction, proxies of social capital, the extent of private financing of cultural provisions and touristic and artistic relevance. We use a panel-data regression analysis and find that, indeed, some determinants of public expenditures on culture are political. In particular, we identify an electoral cycle in which the incumbent spends less on culture in an election year. This result is robust for variations in the empirical model accounting for both the persistence and spatial interdependence of cultural expenditures by municipalities.

The determinants of public expenditure and expenditure on education in particular in a selection of African countries

This study reports on research aimed at measuring the drivers behind public expenditure with specific reference to education expenditure in Africa. The empirical estimations are carried out using a public choice model on a panel of 15 selected African countries over the period 1995-2004. The results show that government expenditure on education is resilient to shocks and the education sector is not seriously affected by allocative changes that favour corruption. Expenditure on education in the countries included in the study generally complies with the guidelines set by the IMF in terms of their fiscal adjustment programs.

The roots of the Eurozone sovereign debt crisis: PIGS vs non-PIGS

The main purposes of this paper are twofold: a) to determine if there are significant differences on the determinants of public expenditures and tax revenues between the so-called PIGS and the remaining Eurozone member states; b) to uncover possible explanations for the different situations in which these countries find themselves nowadays. The paper focus on the effects of the cyclical state of the economy on those fiscal variables, and on the actual adherence to the fiscal rules imposed by the Maastricht Treaty. Based on the estimated results we conclude that the anti-cyclical reaction with respect to the unemployment rate is much stronger among non-PIGS. We also find that fiscal rules have, in general, not been followed by those two groups of countries. Moreover, PIGS, in spite of their economic frailties, have tried to emulate the fiscal behavior of their more prosperous Eurozone partners instead of executing more rigorous policies.

Why Do More Open Chinese Provinces Have Bigger Governments?

AbstractThe transition of China towards a market economy was accompanied by a vast fiscal decentralization movement. Econometric analysis of the determinants of public expenditure of the Chinese provinces does not permit rejection of the hypotheses that (i) the behavior of provinces is similar to that of governments in developing economies significantly affected by external shocks, and (ii) in order to alleviate external risk, they take control of a more significant share of the revenues of the economy.

The Impact of Collective and Competitive Veto Points on Public Expenditures in the Global Age

This study examines the determinants of public expenditures in advanced market economies by simultaneously assessing the impact of domestic political institutions and globalization. A distinction is made between collective veto points and competitive veto points, demonstrating that not all veto points have restrictive effects. It is shown that public expenditures are significantly and positively affected by collective veto points, whereas the oppositeis true for competitive veto points thereby indicating that not all veto points are created equal. In addition to veto points, the effects of globalization are also assessed revealing that globalization is exerting little reform pressures on the welfare state with strong evidence indicating that more globalization buoys public expenditures. Current disbursements and social transfers are both positively influenced by globalization. These findings suggest that domestic political institutions continue to shape policy trajectories in this purported global age.

Public expenditure growth in Greece and Portugal: Wagner's law and beyond

In the tradition of Wagner's law, this study examines the relationship between aggregate income and public expenditures in Greece and Portugal during the years 1958–85. Unlike more conventional specifications, our analysis focuses on the movement of different componenets of public expenditures. Permanent income, relative prices, stabilization policy and socio-political factors emerge as thomain determinants of public expenditures, while the results reveal significant difference in responses to these determinants across components of expenditures and between the two countries.

Two Approaches To Estimating Public Expenditures

Traditionally, the demand for public expenditures has been estimated using for explanatory variables the average values of per capita income, as well as other variables. The results of this approach are disappointing, due to the lack of a theoretical basis. The public choice model, on the other hand, uses the political decision-making process (median voter model) to explain expenditures. Taking the same set of data, it can be shown that the public choice approach yields superior results. It also offers a solution to the unfruitful discussion about the influence of "political" determinants of public expenditures

Comment: On “Long-Run Growth of Nondefense Government Expenditures in the United States”

The paper by Tussing and Henning (1974), which recently appeared in this journal, falls into two parts. One reviews the “determinants” literature: the other presents the authors' own empirical results. The first part properly emphasises the need for a comprehensive approach to the determinants of public expenditure, although some causal influences (e.g., political considerations) appear to be neglected. This emphasis is a welcome recognition that in this field of research we are still concerned essentially with hypothesis formulation: attention needs to be directed primarily to the identification of the important explanatory variables. Unfortunately, despite the breadth of their perspective, Tussing and Henning appear overly ambitious in interpreting their own results. Causal interpretation requires a preconceived idea of what the significant determining variables are, which is difficult in the absence of an operational theory of the fiscal decisionmaking process. In place of this they have adopted a market analogue, which leads to a demand interpretation of expenditure growth. The growth in public spending is thus a function of income, of relative prices (“Baumol's disease”), and of numerous other specific demands (e.g., urbanization, the collectivization of social security, transportation technology, the cold war).