Expenditure Policy Research Articles

Spatio-temporal efficiency of fiscal environmental expenditure in reducing CO2 emissions in China's cities

Although market-based CO2 emission control measures (e.g., carbon tax and carbon trading market) have been deeply discussed, government-based measures have received limited attention. This has led to increased uncertainty regarding the formulation of targeted emission reduction policies. Using a unique dataset, the non-radial directional distance function, a proposed spatial meta-frontier analysis method, and the log t convergence model, this study comprehensively investigates the spatio-temporal trends in fiscal environmental expenditure efficiency (FE) and corresponding causes for in a case study for 106 Chinese cities over 2007–2019. The results show that city-level FE presented a slow upward trend at a relatively low level, with a clearly skewed distribution. The technology gap effect between city groups and the overall best production technology, and the efficiency gap effect within city groups were the main drivers widening the overall FE gap. Convergence analysis indicated that three convergence clubs of FE were found, which were distributed across the country. This study highlights that, when constructing fiscal environmental expenditure policies, the government should focus on balancing the regional gap of FE while comprehensively improving FE.

IMPACT OF GOVERNMENT EXPENDITURES ON INDUSTRIAL OUTPUT IN NIGERIA

The major goal for government expenditure policies according to Keynes is to improve the effective demand which is aimed at increasing industrial output in developing countries like Nigeria. Therefore, this paper is an attempt to examine the impact of government expenditures on industrial output in Nigeria. Thus, the methodology of this paper is the time series data method which were sourced from the Central Bank of Nigeria statistical bulletin 2021 and the study also employed the Fully Modified Ordinary Least Squares (FMOLS) because the data were co-integrated at order 1(1) and the Johansen co-integration test result revealed that there are two (2) co-integrating equations. The R-Square of 98 percent suggests that government expenditures have a positive relationship with industrial output in Nigeria. Specifically, the result revealed that government capital expenditures have a positive and insignificant impact on industrial output in Nigeria. However, the government's recurrent expenditure was said to have a positive and significant impact on industrial output in Nigeria. Therefore, the study recommended that government should review the recurrent expenditures to be real sector and industrial output is driven to increase the impact of industrial output in Nigeria. Similarly, the government should design a mechanism to track the government capital expenditures in Nigeria to ensure that projects are industrial driven especially the infrastructural projects for industrial output in Nigeria.

Performance evaluation of regulatory schemes for retired electric vehicle battery recycling within dual-recycle channels

As electric vehicles (EVs) are developing at a rapid pace, the foreseeable “scrap tide” of EV batteries poses a severe challenge to ecological protection. This article investigates a dual-recycle channel closed-loop supply chain and provides regulatory solutions to retired EV batteries' recycling. Specifically, we construct four supervision scenarios: S1 no policy intervention, S2 reward-penalty scheme, S3 deposit-refund scheme, and S4 dual scheme combining S2 and S3. Based on the Stackelberg game and empirical data, all scenarios' recycling performance is evaluated and compared with a view to “society, economy, and environment”. The results revealed: (1) Compared with S1, the recycling rate and carbon reduction rate in S2∼S4 increase by 2.6049%/0.0092%, 4.0379%/0.0285%, and 6.6660%/0.0379%, respectively; (2) The difference between S2 and S3 in recycling performance depends on regulatory intensities, yet the latter places greater burdens on consumers and firms. The S4 presents optimal environmental performance but at the expense of socioeconomic development; (3) As regulatory intensity increases, social welfare rises driven by environmental benefits, then falls due to overburdened supply chain profits, consumer surplus, and policy expenditures; (4) Carbon trading prices and EVs' potential market sizes affect regulatory schemes’ operations. Our results contribute to policy-making and managerial practices for EV battery recycling.

Growth effects of government expenditure in Nigeria: Does the level of corruption matter?

A strand of literature suggests that an efficient government can complement private capital formation and boost the overall productivity of private economic agents. Nigeria has experienced uneven growth performance in the last three decades despite growing government expenditure. This paper carried out an empirical analysis of direct and indirect links among growth, government expenditure and corruption in Nigeria using annual time series data for the period from 1990 to 2020. The autoregressive distributed lag (ARDL) model was used to explore the long-run interacting effect of corruption on the nexus between growth and government expenditure. For the robustness check, the fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) were used as alternative techniques of estimation. Directly, an increase in government expenditure and a reduction in corruption has a significant increasing effect in the short-term and long-term growth. Indirectly, reducing corruption enhances the increasing effect of government expenditure on economic growth. However, corruption reduction up to the 42.25 threshold and beyond diminishes the increasing effect of government expenditure on economic growth. This suggests that attaining sustained growth is possible by raising government expenditure and minimizing corruption. Thus, minimizing corruption associated with expenditure policy should be a top policy priority.

Renewable power generation policies in China: Policy instrument choices and influencing factors from the central and local government perspectives

Renewable power generation, which is the main driver of power decarbonization, is strongly supported by government policies. However, there are deficiencies in policy design, e.g., a lack of time consistency, incoordination among policies, and local protectionism. Policy-makers need to understand the evolution of renewable power generation policy instrument choices and the inherent influencing factors. This study uses textual content analysis to analyse the historical evolutionary trends, policy categories, dominant government departments, and the distribution along industrial segments of renewable power policy instruments from the perspectives of both the central and local governments. The factors influencing the policy instrument choice of local governments, especially the influence of CO2 emissions and thermal power generation on the choice of policy instruments for renewable power generation, are further analysed. The results show that China has formed a multi-sectoral and collaborative renewable power generation policy framework from the central government to local governments. Direct provision instruments and fiscal expenditure instruments are extensively employed, leading to over-dependence on such policy instruments. Empirical analysis shows that there is an inverted U-shaped relationship between the frequency of use of renewable power generation policy instruments and CO2 emissions, as well as a positive relationship with thermal power generation. More specifically, in provinces with high CO2 emissions, local governments are more likely to choose direct provision and fiscal expenditure. Provinces with a high installed thermal power capacity have a more frequent use of both regulatory and fiscal expenditure policy instruments by local governments.

Cohesion policy and citizens' identification with the European union

European identity is recognised as an important element of the European Union's (EU) sustainability. It can be influenced by economic benefits from EU membership and a combination of historical, cultural, social, economic, and political factors. The paper focuses on identifying the relationship between citizens' identification with the EU and Cohesion policy expenditures as perhaps one of the most visible benefits of EU membership at the regional level. Results of econometric analysis reveal that citizens' identification with the EU is higher in regions with higher EU funds expenditures and better socio-economic situation. European identity seems to be positively influenced by perceived EU benefits, understanding how the EU works, and persuasion that country interests are considered in the EU. Moreover, we confirm the positive relationship between awareness of Cohesion policy and identification with the EU.

Analysis of Public Expenditure Policy Regime and Its Relationship with Economic Growth over Different Political Regimes of Nepal

This study analyzes trend and pattern of public expenditure and relationship with economic growth in Nepal by using descriptive, trend, ratio and correlation method based on secondary data from 1975 to 2019. As a result, a trend of recurrent expenditure (RE) is inclining with positive growth, a trend of government expenditure (GE) is also inclining. However, it is different in case of capital expenditure (CE) because of consistent trend. Recurrent expenditure is unnecessarily expansionary but capital expenditure is unnecessarily contractionary. Recurrent expenditure (RE) is positively correlated with Government expenditure (GE) and capital expenditure (CE) is negatively correlated with Government expenditure (GE). It shows the expansionary budgetary policy doesn’t influence on CE but can be seen in GE and RE. Lastly, the annual positive change of regular expenditure in the share of public expenditure is higher than in the share of GDP. Whereas, the annual negative change of capital expenditure in the share of public expenditure is higher than in the share of GDP. Thus, uncontrolled expansionary regular expenditure and unnecessarily contractionary capital expenditure are big issues to macro-economic stability and higher economic growth of Nepal. This paper is expected to contribute to understand public expenditure and its linkage with economic growth and to formulate public expenditure framework.

DISAGGREGATED HEALTH EXPENDITURE, HIV PREVALENCE AND ECONOMIC GROWTH IN WEST AFRICA : THE AUGMENTED SOLOW GROWTH MODEL APPROACH

This study investigated the relationship among health expenditure, HIV prevalence and expansion of productive economic activities in West Africa using sub-regional aggregate time series data from 1992 to 2020. The augmented Solow growth model was adopted to enable us to understand and maximize both the theoretical and empirical anatomy of HIV prevalence as it relates with the expansion of productive economic activities and disaggregated health expenditure in West Africa in the context of a growth theory and to conveniently apply the Hsiao causality framework in the form of a vector autoregressive model. The augmented Solow model theoretically made it possible for us to uniquely identify and specify six (6) bivariate hypotheses-supported models as sustainable fulcrums for the empirical application and validation of the Hsiao causality test. Health expenditure was disaggregated into total, public, household out-of-pocket, and non-household private health expenditures to specifically determine the impact of the relationship between the expansion of productive economic activities and HIV prevalence on each of these components of health expenditure. The results show that the total health expenditure-led growth and private health expenditure-led growth hypotheses were not validated for the sub-region. However, the growth-led total, growth-led public, and growth-led private health expenditure hypotheses are validated for the sub-region. Also, HIV prevalence-led total, HIV prevalence-led public, and HIV prevalence-led private health expenditure hypotheses are validated for West Africa. The study recommended that for sustainable inflows of total, public and private health expenditure into the sub-region, the expansion of productive and growth-enhancing economic activities and HIV mitigation policies should incorporate health expenditure policies both in the long, and short-run periods.
 Keywords: Hsiao causality, HIV Prevalence, Health Expenditure, Economic Growth, 
 Solow Model.
 JEL CLASSIFICATION:C11, C18, I10, I150

Market failures and willingness to accept smart meters: Experimental evidence from the UK

To facilitate the sustainable energy transition, governments and innovators are encouraging households to adopt smart technologies that allow for increased flexibility in energy grids. At the time of undertaking this research in 2020, the UK’s ambitious smart metering policy had indisputably failed to achieve its objective of equipping all dwellings with smart meters. This research uses a novel experiment to elicit the willingness to accept of 2,430 nationally representative UK households for smart meter installation. Randomized information treatments allow for assessment of the impact on adoption and willingness to accept of oft-cited market failures, namely imperfect information and diffusion externalities. We explore treatment effects and identify non-additional policy expenditures for a range of potential subsidy programs.

Natural Resource Rents and Economic Growth Paradox, the Analysis of Resource Curse and Its Transmission Channels in West Africa: The Role of Public Expenditure Policy

The study analyses the natural resource curse through the component of public expenditure policy, namely productive and unproductive expenditures, as plausible channels transmitting the resource curse in West Africa. The study examines which channel is the most prominent transmitter among public expenditure, Dutch disease, rent-seeking, and political institutions. A dynamic panel was adopted for the 1998-2018 period using Feasible Generalised Least Squares (FGLS) and Dynamic Ordinary Least Squares (DOLS) estimation techniques. The results confirmed the resource curse hypothesis in West Africa via productive expenditure and rent-seeking behaviour as the only relevant transmission channels. Moreover, productive expenditure interacting with natural resource rents mitigates the resource curse and can reverse it under a certain threshold. On the other hand, unproductive expenditure through government consumption expenditure exacerbates the resource curse. The findings suggest that appropriate productive expenditure policy measures in terms of fixed capital formation, and a diligent fight against corruption can overturn the resource curse over time.

Growth and Convergence: How could Governments Make Valid Expenditures to PromoteInnovation?

Economic growth had seen slowing growth rate in some developing economies mainly due to the limitations of convergence and catching-up effect, despite this theory having once provided the theoretical basis for the rapid growth of developing economies at their early stage. Due to the impacts of the global pandemic, this cease in growth is likely to occur more rapidly. Based on the endogenous theory of growth, this study conducted a deeper analysis from the aspect of government and its intervention, by dividing government expenditure into three categories that effect the environment and incentives for innovation to occur within an economy without taking direct investment into account. The variables via each category could be matched with an economic indicator that is either directly reflecting upon the government’s expenditure or is largely dependent on the government’s intervention. After conducting statistical data analysis on the raw data collected from the National Bureau of Statistics and the World Bank, the linear correlation constructed within the model could be tested with the significance coefficient of each variable. The output of this study put forward the endogenous theory of growth. Despite not being able to generate accurate anticipations, the general pattern of growth could be predicted with suggestions for the government to adjust their expenditure policies and plans in accordance with the economy’s status and the growth of that economy can be oriented in theory.

The Anomaly of Leading Indicator

The counter cyclical strategy used to deal with the Covid-19 pandemic is through fiscal policy, government expenditure by refocusing on the health sector and economic recovery. This policy is not only carried out in Indonesia but in other affected countries. In general, government expenditure has made positive impact on GDP, but during the COVID-19 pandemic this affect became negative. Using data from 137 countries, government health expenditure has a negative impact on GDP. If government expenditure policies continue to focus on health care, it will have an impact on other sectors, ultimately negative economic growth. In addition to refocusing on health expenditure, there are also assistance programs for affected communities. Higher aid should affect the GDP, but there is no difference in GDP growth between the two groups of countries based on the percentage of income support. Government expenditure policies in each country certainly aim to maintain the stability of the country, but the policy objectives should be allocated not only curatively but also preventively by taking into account the long-term impact post covid-19 Era.

Public Expenditures, Economic Growth and Income Inequality: Empirical Evidence from the Commonwealth of Independent States

This study has examined the causality relationship between public expenditures, economic growth and income inequality for transition economies called the Commonwealth of Independent States (CIS). In the study, in which the 1998-2019 period was analyzed, the effects of public expenditures on economic growth and income inequality were determined with the bootstrap panel causality test. Bootstrap panel causality test results show that there is a one-way causality relationship from public expenditures to economic growth for Armenia, Belarus, and Kazakhstan. On the other hand, a one-way causality relationship has been determined from public expenditures to income inequality in Belarus and Kazakhstan, and from income inequality to public expenditures in Kyrgyzstan. In Moldova and Russia, however, no causal relationship could be obtained between the variables. The overall evaluation of the findings obtained from the panel causality tests concluded that public expenditures in CIS member countries are closely related to both economic growth and income inequality. CIS member countries need state interventions in order for the market system to fully settle in transition period. However, implementing policies that do not exclude private investments and do not harm the functioning of the market economy should be elaborated during practicing public expenditure policies in these countries in transition.

Interregional infrastructure, competition for capital, and local public expenditure policies: Evidence from China's high‐speed rail network

AbstractInterregional infrastructure promotes market integration and enhances the mobility of capital, thereby intensifying fiscal competition among local governments. Exploiting the expansion of China's high‐speed rail (HSR) network as plausibly exogenous shocks, this study examines how Interregional infrastructure affects the fiscal competition among local governments. We find that after connecting with the HSR network, city governments tend to dedicate a lower proportion of public spending to consumption goods, which benefit immobile households, and invest more in productive inputs, which attract mobile firms. We also find that the negative effect of HSR connection on the proportion of consumption goods is more pronounced in peripheral cities than core cities because periphery cities face a larger increase in capital mobility due to the core–periphery effects of trade integration induced by HSR. Our findings indicate that the behavioural responses of local governments should be accounted for when assessing the social welfare of interregional infrastructure.

Public expenditure and human development in Brazilian municipalities

Purpose: This study examines the relationship between the structure of public expenditure composition in Brazilian municipalities governments and the local human development in the period from 2005 to 2016.
 Methodology: Hypothesis testing was used to analyze the relationship between public spending in municipalities, which were categorized according to their spending indexes (SI), and the Índice Firjan de Desenvolvimento Municipal (Firjan Municipal Development Index; IFDM), a proxy for human development, based on the concept proposed by Sen (1999). Therefore, data from all 5,570 Brazilian municipalities were used, treated in an aggregated form using Data Panel analysis and Quantile Regression to more comprehensively address the heterogeneity of Brazilian municipalities.
 Results: The results make possible to infer that the changes in the public expenditure composition did not produce a striking improvement to the population’s well-being. It is evident that despite the maintenance of social policies due to strong regulation by the central government, spending, although increasing in these areas, has not been producing the desired effects in improving the population's well-being indicators.
 Contributions of the Study: This research contributes to academia and society, as it shows that for Brazilian municipalities to make effective strides toward growing and toward sustainable human development indicators in a more incisive way, the hegemonization of the public expenditure policy requires adjustments. These adjustments could consider the idiosyncratic conditions of the different stages of human development in the subnational units.

Vector Auto Regressive Analysis identifying government expenditure policy impact on sustainable economic development

This research investigates the effects of government expenditure in Uganda on infrastructure in promoting sustainable economic. The study used a longitudinal research design using financial records from financial years 1984-85 to 2015-16 as population with a sample size of 32 annual observations. The Johansen cointegration test indicates a long-run association between government expenditure in infrastructure, communication, electricity, and financial development. The Granger- Connection findings shows indirect connection between economic development rate and all the parts of public spending that were used with P-Value 0.04 and lastly, the Vector Auto Regressive (VAR) consequences indicated that public spending on infrastructure, communication, and energy, had a direct effect on economic development rate with P-Value 0.00. The paper recommended that extra spending on substantial infrastructures such as roads, airports, railways, water facilities, electricity, and communication add extensively to the economic development rate by growing the efficiency of the public and private sectors.

Analysis of the Implementation of Defense Expenditure Policy for Fiscal Year 2020 at the Ministry of Defense

This article aims to analyze the implementation of the defense spending policy in the fiscal year 2020 at the Ministry of Defense. The problem is focused on the success or failure of the implementation of defense spending policies in the fiscal year 2020 by using the theory of policy implementation by George C. Edward III. This study uses a qualitative approach with a descriptive method. The data were collected through documentation or literature study and analyzed qualitatively using an interactive model. This study concludes that the implementation of the defense spending policy has not been effective, especially in the procurement of the main weapon system equipment. This is a challenge faced by the Ministry of Defense. The procurement of the main weapons system can increase defense strength. However, the procurement of the main weapons system equipment that is still on raw materials from abroad shows the need for the development of the domestic defense industry. So support in the form of a larger budget and government commitment is very much needed so that the defense force can increase as well as the independence of the domestic defense industry can be realized immediately.

Integrating Economic and Environmental Policy

Integrating environmental policies into economic policy making is vital for environmental sustainability. This article explores three keyintegration mechanisms: enhanced national state of the environment reporting, expanded environmental target setting, and mainstreaming the environment in fiscal policy and the annual budget cycle. The article discusses environmental reporting, resource management and wellbeing budgeting in New Zealand, including recent reviews and proposed reforms. It outlines the rapidly developing international practices in green budgeting. Entry points are identified for operationalising the current wellbeing budgeting framework by progressively exposing environmentally harmful fiscal policies, highlighting win–win tax and expenditure policies that are good for both the environment and the economy, and exposing trade-offs for more transparent deliberation.

Public Expenditure and Green Total Factor Productivity: Evidence from Chinese Prefecture-Level Cities.

Whilst effective public expenditure policies are essential for transforming the traditional factor-driven economy into a green and innovation-driven economy, the impacts of public expenditure’s size and composition on green economic development have not been comprehensively investigated. This paper attempts to fill this research gap. Based on the data of Chinese prefecture-level cities from 2010 to 2018, we first measure green total factor productivity (GTFP), the proxy variable for green development, and briefly analyze its spatial-temporal trends. Then, using the dynamic panel models, dynamic panel mediation models, and dynamic panel threshold models, we evaluate how public expenditure affects GTFP. The main findings are fourfold: (1) there is a significant inverted U-shaped relationship between the expenditure size and GTFP. (2) The expansion of social expenditures and science and technology (S&T) and environmental protection expenditures play an important role in stimulating green growth, while economic expenditures and administrative expenditures have adverse effects. (3) Public expenditure mainly promotes green development through four channels: human capital accumulation, technological innovation, environmental quality improvement, and labor productivity increase. (4) The expenditure composition influences the turning point of the inverted U-shaped relationship. Based on these findings, we propose some targeted policy suggestions to promote green development.

Fiscal competition and state pension reforms

AbstractFiscal competition literature emphasizes the need to consider fiscal implications of the flow of labor and capital across jurisdictional boundaries. This open‐economy consideration raises issues for the analysis of fiscal policies, ranging from taxation and expenditure policies to the structure of intergovernmental relations and interjurisdictional competition. Using data on state population movement and pension reforms (2002−2015), this study examines whether the adoption of pension reforms was motivated by state government competition for the mobile tax base. The findings suggest that interstate migration has an influence on states’ enactment of pension reform, and the effect differs by state population density.