Increase In Public Expenditure Research Articles

Directions of Fiscal Policy Transformation in the Crisis Period of Economic Development of Ukraine

"The purpose of the study is to determine the directions of transformation of the country’s fiscal policy at the expense of the main fiscal sources during the crisis period. The methods of analysis, interpolation, probabilistic analysis, entropy estimation and entropy production were used during the research. The article presents the results of the assessment of the dynamics of the main fiscal indicators of Ukraine in two time frames for the period 2011-2020 and for the period 2011-2022. It was determined that the expansion/ extension of the period of assessment of the dynamics during the crisis of 2021-2022 made it possible to identify qualitative changes in the dynamics of fiscal indicators while maintaining their cyclicality. Such changes are especially destructive in the real sector of economy, which has led to a significant increase in the level of uncertainty of all fiscal indicators. Based on the results of the analysis of entropy production in the system of connections between fiscal indicators, directions for mitigating crisis phenomena in the economy of Ukraine are proposed. In particular, a change from a restrictive fiscal policy to a discretionary (stimulating) one and an increase in public expenditures aimed at stimulating the development of the real sector of the economy and consumption, which will determine positive economic dynamics with a lag of 9 months, are recognized as expedient."

Застосування фіскальних правил у період подолання наслідків війни

Introduction. During the period of overcoming the consequences of the COVID-19 pandemic and the full-scale Russian invasion of Ukraine, the risks of compliance with fiscal rules have intensified. Fiscal policy restrictions imposed by them restrained the active budget expansion necessary to increase spending and attract resources to finance adopted state programs. The task of revising the application of fiscal rules, determining rational levels of state budget financing, and preventing critical levels of the state debt from exceeding has arisen. Problem Statement. The negative effects of the pandemic and the war required a sharp increase in public expenditures, adjustments to their structure, and an increase in financial resources to cover them. Compliance with the requirements stipulated by the fiscal rules in force at that time did not allow to go beyond the accepted limits (regarding the maintenance of the indicators of the budget deficit and state debt). There was a need to make changes to the implementation of the budget policy to take into account the restrictions imposed by the fiscal rules. The purpose is to assess the application of fiscal rules in the period of overcoming the consequences of the war, as well as their adjustment in the aspect of reform programs in the EU. Methods. Conceptual approaches to complying with fiscal rules during the war and overcoming its consequences are defined. The issue of methodical provision of fiscal rules, application of mechanisms and budgetary procedures with the aim of their implementation in the practice of state administration is revealed. Results. In Ukraine, the introduction of fiscal rules into the practice of public finance management is in the initial stages. Unlike the EU, they contain only digital limits of budget aggregates, but do not provide for the use of mechanisms for maintaining fiscal stability and debt sustainability. It is also not provided for the application of the necessary budgetary procedures directing the state administration bodies to comply with these rules. During the period of overcoming the consequences of the pandemic and the war, fiscal rules began to restrain the implementation of an active expansionary policy, and therefore their effect was suspended. The recovery of Ukraine involves a review of the use of fiscal rules, taking into account the experience of their reform in the EU. Conclusions. The application of fiscal rules in Ukraine requires significant changes for their application in the practice of budget management, which take into account the results of their use in the EU member states, as well as the features of the economic and social development of our country. Such changes include: the adoption of real medium-term budget goals, the use of preventive mechanisms aimed at developing the state budget taking into account updated approaches, the adjustment of budget operations (in cases of deviations from the accepted requirements), the use of budget procedures that direct the government to comply with fiscal rules for the early correction of such deviations, deepening the transparency of budget operations, strengthening monitoring and evaluation of the use of budget rules by the parliament and specially created independent fiscal institutions.

To Evaluate The Impact Of Expansionary Fiscal Policy In Curbing The Impact Of Unemployment In The Singaporean Economy During The Covid-19 Pandemic

With the COVID-19 pandemic becoming increasingly prominent in early 2020 in Singapore, the amount of cases were on the rise. As shown in the Susceptible-Exposed-Infected-Recovered (SEIR) distribution chart, the number of people infected follows a hump-like pattern, indicating that it increased first and then fell subsequently. Given that this happened in a very short time frame, it is intriguing how the first wave of the COVID-19 pandemic and its subsequent economic consequences were dealt with incredibly well, only possible through economic policy-making, fiscal policy being primarily significant. Expansionary fiscal policy comprises policies of reduction in tax rate and increase in public expenditure undertaken by the government to increase the Aggregate Demand (AD) in the economy.

Non-traditional Tools for the Central Bank of Iraq as a Model

This research deals with the study of the case of the Iraqi economy and the crises that occurred in it due to the country's dependence on non-traditional monetary policy tools. The accumulation of deficit in the general budget in Iraq is a result of the decline in public revenues and the increase in public expenditures due to the economic blockade and its negative repercussions, as well as the results of wars that cost the country money. This is why we find the divergence of monetary and fiscal policy measures according to what the monetary policy is that finances the deficit in the public budget and through its traditional and non-traditional levels, especially after the emergence of the remnants of the economic blockade, and thus the debts rose, which represent the total deficits of the general budget. We also note that the monetary policy proceeds according to the financial policy. The Central Bank is responsible for financing the deficit in the general budget through (the new monetary issue and quantitative easing) and these financing mechanisms structural imbalances in some monetary variables that prevent the central bank from financing the government, whether directly or indirectly.

A SYSTEMS THINKING APPROACH TO NAVIGATE INTERLINKAGES TO ACHIEVE SDGs IN INDIA

While there has been much talk about the integrative, indivisible, and interlinked strategies to achieve the SDGs (UN Sustainable Development Goals), the interactions and interdependencies are generally not explicit. Challenges remain to simultaneously capture the multilayered relationships among SDGs to strategically and coherently align national development plans. In this paper, we use systems thinking and systems dynamics modelling analysis to capture the cross-effects of intervention policies by taking one national indicator for each of the three selected goals. These are budget inclusiveness (increase in public expenditure on health) in SDG 3 (on good health and well-being), literacy rates (literacy rate of youth in the age group of 15-24 years) in SDG 4 (on quality education) and equity (employment gender bias) in SDG 5 (on gender equality) together to assess their effect on the SDG 8 (of decent work and economic growth). A Causal Loop Diagram (CLD) has been used to present the qualitative structure of the model. In our modelling, we logically draw interlinkages and then attempt to support them with existing evidence. Our main result is to confirm that reinforcing loops of such interventions exist, which are important for sustainable development policy. We have extended the Causal Loop Diagram (CLD) by proposing what effects could be realised in other SDGs related to poverty (SDG 1), sustainable consumption and production (SDG 12), and global partnerships (SDG 17). The paper concludes that such analysis will bring interlinkages to the foreground for prioritising the national goals and targets and hence implement policies in priority areas achievable by 2030 for India on a development strategy informed by systems thinking.

Public expenditure and drug policies in Bulgaria in 2014

Aim: The objective of this study was to provide an analysis of the factors which have a significant impact on the growth of public expenditure on medical products in Bulgaria.
 Methods: This research work consists of a critical analysis of the data reported by theNational Health Insurance Fund in Bulgaria on the stability of the healthcare insurance model and the implementation of the budget for 2014.
 Results: The results from the current analysis indicate that the growth of public expenditure is directly proportional to the number of reimbursed medical products and that the pattern of prescriptions including the innovative medical products mainly for the treatment of oncological and rare diseases has a significant impact on it.
 Conclusion: The reasons for the increase of public expenditure in Bulgaria include the non-transparent decisions in pricing and reimbursement of the products, the lack of guidelines for presenting pharmacological evidence and the lack of legislatively-defined drug policies for the management and control of the patterns of medical prescriptions.

Fiscal Stimulus in the European Union to Stabilize the COVID Shock

We document fiscal policies adopted in 2020 in five major European Union (EU) countries to deal with the COVID-19 pandemic. Then, we show the correlations between fiscal indicators and GDP growth. Economic stabilization was easier in countries where the budget deficit and the public debt were relatively small, with more room for maneuvers to conduct a counter-cyclical fiscal policy. Besides, the increase in public expenditure (cash transfers) did not always correlate with economic growth, whereas preserving government revenue was important in the case of tax cuts. More precisely, regarding the fiscal revenues of the EU member countries in 2020, reducing the weight on corporate income taxation, to sustain production supply and wealth creation by firms, was correlated with higher economic growth. Stylized facts show that the recession was weaker in countries where the relative weight of indirect taxation on household consumption increased, as in the Nordic countries.

General Equilibrium Effects of Investments in Education and Changes in the Labor Force Composition

In this paper, a novel approach to modelling education and human capital formation in a computable general equilibrium model is proposed. Rather than adopting microeconomic-based assumptions of human capital formation, the method is based on an empirical relationship between labor force composition and expenditure on education services. It is found some robust correlation between workers’ shares in the labor force and educational expenditure, in real terms and per capita. To assess the implications of these findings, the impact of an increase in public expenditure devoted to education is simulated in a conventional CGE model for Ethiopia. The simulation results highlight the existence of a multiplicative effect, such that the overall increase in the supply of education services, in the final equilibrium state, is more than three times larger than the initial demand push. This comes associated with a positive supply shock, entailing gains in productivity, income, and welfare, as well as changes in the structure of the economy.

The relationship between health expenditure indicators and economic growth in OECD countries: A Driscoll-Kraay approach.

The main purpose of the study is to examine the relationship between health expenditure indicators and economic growth in OECD countries. In this context, health expenditures and economic indicators data of 21 OECD countries were analyzed by the Driscoll-Kraay standard error approach within the scope of panel data analysis. While Gross Domestic Product (GDP) and income per capita were used as dependent variables, the amount of out-of-pocket health spending, per capita health expenditure, the amount of public health expenditure, the ratio of drug expenditures to gross domestic product, the share of current health expenditures in GDP were used as independent variables. According to the results, in the model (Model 1) where real GDP level was used as the dependent variable, all health expenditure indicators were positively related to the economic growth. When the estimation results of Model 1 are examined, it is predicted that there will be an increase of 0.09% in GDP in case of a 1% increase in the share allocated to health services from GDP. In case of a 1% increase in the amount of out-of-pocket spending on healthcare, it is foreseen that there may be an increase of 0.04% in the real GDP. In the model (Model 2) where the per capita income variable is the dependent variable, it is seen that the increase in out- of-pocket health spending has a decreasing effect on the per capita income level, while the increase in public expenditures has an increasing effect on the per capita income level. From the findings of Model 2, it was found that if a 1% increase in the share of current health expenditures in GDP, there may be an increase of 0.06% in the amount of per capita income. Concludingly, it is possible to say that that public resources allocated to health services play an important role in the economic growth.

Assessing non-linear effects of government size on inflation in India: recent evidence from smooth transition autoregression model

PurposeStandard economic theory predicts that any increase in public spending is accompanied by a rise in inflation in an economy. This paper presents empirical proof that prices do not always rise with an increase in public expenditure but only up to a certain threshold level. The primary aim of this paper is to unearth the government size-inflation nexus in India for the period from 1971 to 2019.Design/methodology/approachThe logistic STAR (smooth transition autoregression) model is employed to unravel the government size-inflation nexus for the Indian economy from a non-linear perspective.FindingsThe finding of our study confirm the non-linear relationship between the size of the government and inflation in India. The estimated threshold level for government size is precisely found to be 9.27%. The size of the government exerts a negative influence on inflation until it reaches the optimal or threshold level. Any further increase in the size of government beyond this threshold level would result in a rise in inflation.Research limitations/implicationsThe findings have implications for the conduct of fiscal policy. Policymakers can increase government spending in a regime of small government size without having any inflationary impacts by generating revenues from taxes and other sources instead of relying much on the central bank. In the regime of a large-sized government, adhering strictly to the discipline in the conduct of fiscal and monetary policies would help curb inflation and enhance growth synchronously, hence alleviating any loss of welfare.Originality/valueTo the best of the authors’ knowledge, this study is an attempt to revisit the government size-inflation nexus in India from a non-linear perspective using the Smooth Transition Autoregression (STAR) model for the first time.

Türkiye'de Kamu Harcamalarının Covıd-19 Salgını Sürecinde Seyri: Sıçrama Hipotezinin Geçerliliğinin Değerlendirilmesi

The Covid-19 pandemic has not only put public health at risk throughout the world, but it has also slowed down business operations of countries and brought the industry to a stop. This pandemic required government interference, as well as global measures by international organizations. As a result of the actions and measures implemented, the level of public expenditures has increased significantly. There are various approaches in theory to explain the increase in public expenditures. One of these approaches, the Peacock-Wiseman hypothesis, claims that public expenditure increases by leaps and bounds during extraordinary periods like crisis and war. In this context, the basis of the study is the evaluation of the relationship between the Covid-19 pandemic, which is an extraordinary period, and public expenditures. The aim of this study is to detect the jump levels in sub-components of public expenditures after classifying public expenditures in Turkey according to the Analytical Budget System's Economic Classification during the Covid-19 pandemic period. As a result of the studies on Turkey, when public expenditures during the Covid-19 pandemic are examined according to the economic classification, which is the sub-branch of the analytical budget classification, it was observed that personnel expenses, current transfers, capital expenses and liability component have jumped to a new level and when the relationship between these public expenditures and the pandemic period was examined, it was discovered to overlap with the Peacock-Wiseman hypothesis.

Does increasing public expenditure on sports promote regional sustainable development: Evidence from China.

In the post-COVID era, how to improve the level of regional sustainable development has attracted much attention. And the vigorous development of the sports economy may be closely related to the regional sustainable development. This paper explores the impact and mechanism analysis of government sports public expenditure on regional sustainable development from the perspective of sports economic development. The study found that China's sustainable development presents obvious ladder-like characteristics and highlights the regional imbalance and inadequacy of regional green and coordinated development. And the government's increase in public expenditure on sports can significantly promote regional sustainable development and improve the level of regional green and coordinated development. With the continuous improvement of the regional economic development, the effect of sports public expenditure continues to increase. It can be seen from this that implementing the strategy of strengthening the country through sports under the government's guidance is an essential guarantee for the public health and quality of life and the sustainable development of the economy and society. Additionally, the development level of market finance is also an important driving factor for the government's public expenditure on sports to improve the level of sustainable development in the region. From the mechanism analysis, the government activates the local residents' consumption level by increasing the public expenditure on sports, thus promoting regional sustainable development.

Democracy, state capacity and public finance

AbstractThe paper addresses how democracy can affect public finance and state capacity investment. We show that the effect of democracy on public policy can take two forms: direct and indirect. The direct effect transpires when increasing democracy leads to an increase in public expenditure which results in increased public goods provision and reduced political rent. The indirect effect emerges when increased democracy leads to a reduction in state capacity investment and, subsequently, to a reduction in public goods provision. Paradoxically, lower political rents deteriorate the incumbent's incentive to invest in state capacity, at the expense of public goods provision.

Budget Variation and Welfare in Cameroon: a Computable General Equilibrium Model Approach

The objective of this paper is to determine the impact of a variation in government spending on the well-being of the population in Cameroon. We use the Computable General Equilibrium Model (CGEM) developed by Decaluwé et al., [1] calibrated on the 2016 Social Accounting Matrix (SAM) for Cameroon [1]. This SAM is constructed from the Resources and Uses Table (RUT) and national accounts data from the National Institute of Statistics [2]. The welfare is measured by the equivalent variation indicator. The results show that a 20% increase in public expenditure would contribute to improving the well-being of salaried households and capitalist households by 883.58 billion CFAF and 5.47 billion CFAF respectively. This improvement in wellbeing is achieved through a reduction in the current price of goods and services in the various sectors (0.76% for agriculture, 0.53% for industry, 0.76% for services and 0.57% for public services) on the one hand, and through an increase in household income on the other, whether they are salaried or capitalist earners.

Beyond financial constraints: The politics of Irish health system reform in the aftermath of the great recession

AbstractThis article investigates the main factors influencing the success of welfare reforms in the context of crises. It focuses on the healthcare reform plan proposed in Ireland in the aftermath of the Great Recession, which aimed at the establishment of a universal health system but was only very partially implemented. As the plan would have required an increase in public expenditure, it may be expected that cost concerns explain the overall reform outcome in the context of an economic crisis. However, analysis of the process leading to the abandonment of a central element of the plan and the partial introduction of another component shows that, apart from financial concerns, the outcome is explained by three politico‐institutional factors: the political orientation of the parties in government; electoral (dis)incentives in pursuing different elements of the reform; and the extent of institutional change associated with them.

Carbon Emission Intensity Characteristics and Spatial Spillover Effects in Counties in Northeast China: Based on a Spatial Econometric Model

Under the “double carbon” target, it is important to reduce carbon emissions in each region. Using exploratory spatial data analysis (ESDA), the center of gravity method, and spatial econometric models, we analyzed the characteristics and spatial spillover effects of carbon emission intensity in counties in Northeast China from 2000 to 2020 and made recommendations to the government for more reasonable carbon reduction strategies in order to achieve sustainable development. The results were as follows: (1) Since 2000, the carbon emission intensity in Northeast China has increased after first declining, and the carbon emission intensity in the western and northern regions of Northeast China has increased faster than Northeast China’s average. (2) After 2000, the spatial aggregation of carbon emission intensity has improved in Northeast China. (3) Northeast China’s carbon emission intensity has a positive spatial spillover effect. Through the feedback mechanism, the growth in population size, the rise in economic development level, the level of industrialization as well as the rise in living standard, the land use structure dominated by arable land and construction land, and the increase in urbanization level in the region will cause the carbon emission intensity in the surrounding areas to increase. An increase in public expenditures leads to a decrease in carbon emission intensity in the adjacent area. (4) When the vegetation cover exceeds its threshold value, it can have a larger inhibitory influence on carbon emission intensity. To summarize, each county in Northeast China is a carbon emission reduction community, and policymakers must consider the spatial spillover effect of carbon emission intensity when developing policies.

Wagner's Law vs. Keynesian Hypothesis: Empirical Evidence for G20 Countries

The economic growth-public expenditure relationship is one of the important subjects that both policymakers and scientists focus on during extraordinary conditions such as economic crises, natural disasters or epidemics. Despite the privatization practices and the efforts to adopt the minimal state approach proposed by neoliberalism, which have become widespread significantly since the 1970s, public expenditures increase the interest in the subject. The study analyses the validity of the Keynesian approach, which argues that public expenditures are a fiscal policy tool that supports economic growth, in G-20 countries, as opposed to Wagner's approach, which argues that economic growth is the reason for the increase in public expenditures. The analysis was carried out with the Pesaran CCEMG estimator, which considers cross-sectional dependence and heterogeneity, using annual data from 1994-2017. According to the findings, it could be stated that Wagner's Law is not valid in G-20 countries because the slope coefficient does not fulfil the condition of being more significant than 1, whereas the Keynesian approach is valid. Moreover, a bidirectional causality was discovered between economic growth and public expenditures. Consequently, public expenditures can be used as an effective fiscal policy tool to eliminate economic instabilities under political, economic, or extraordinary conditions such as COVID-19.

Investigation of the Effects of Economic Indicators on Child Mortality: Panel Data Analysis

The health level of society is an indicator of the development as a whole, and it is monitored through various indicators. Among these indicators, infant and child mortality are followed by both countries and international organizations. The purpose of this study is to determine what effect economic variables have on child mortality. A Panel data analysis was used as a method in the study. Eviews 10.0 and Stata 15.0 package programs were used for data analysis. While the research universe is composed of 132 countries in the middle-upper income and high-income groups in the World Bank classification; The sample of the research consists of 49 countries whose data are taken. The time dimension of the study constitutes the 2000-2019 periods and the data types of the variables were used annually. While variables representing child mortality are used as dependent variables in the study; Gini index value representing income distribution, Gross Domestic Product, per capita income, public expenditure level, and the unemployment rate were used as independent variables. As a result of the research, it has been revealed that there is a positive relationship between the unemployment rate and income inequality and under-five mortality and neonatal deaths. Also, it has been observed that there is a negative relationship between the increase in public expenditure, per capita income and the level of Gross Domestic Product, and under-five mortality and neonatal deaths. It has been observed that the neonatal mortality rate is affected by economic variables more than the under-five mortality. In this context, it has been revealed that economic indicators are significantly related to child mortality.

Empirical Analysis of the Impact of Education on Economic Growth

Education is a crucial factor for sustainable economic growth. Therefore, public expenditures on education are of great interest to both researchers and policy makers. The channels through which education affects economic growth differ according to the level of development of the country. This study aims to measure the impact of public expenditure on education for economic growth in North Macedonia. The data used are secondary data derived from the World Bank Indicators for the period 1917–2020. The econometric model employed in this study is an Instrumental Variable Two-Stage Least Square. The dependent variable in the model is Gross Domestic Product and the independent variables in the model are public expenditures on education, labor force participation rate, gross capital formation, unemployment, industry, wages, employment, information, and communication technology, and the instrumented variable is tertiary enrolment. This study suggests that a one-point increase in public expenditures on education will positively affect economic growth in the North Macedonia. The study also shows that a one-point increase in unemployment will increase economic growth and a one-point decrease in employment will increase economic growth in North Macedonia. These two results, which contradict the theoretical and empirical approaches, prove the mismatch between the supply and demand of real occupations in the labor market in North Macedonia.

Covid-19 – the impetus for public service innovation. Advancing the shift towards social procurement

With the present and future being shaped by the Coronavirus disease and worldwide responses to it, critical insights are essential. The Covid-19 pandemic has profoundly influenced the lives of most people on the plane as well as the global market, some experts believing it has caused the worst economic decline since the Great Depression. The pandemic found States unprepared to face the challenges brought by it, it has exposed the vulnerabilities of individuals, societies and economies. A few months after the sparking of the first wave of Covid-19 it was possible to assess the earliest public intervention and to foresee how the virus is going to impact economic and social systems. Given the significant increase in public expenditure since the beginning of the pandemic, this Article will articulate and explore the role of public procurement in anticipating the risk of market failure, despite the complicated environment. Likewise, focus will be drawn upon the EU soft law instruments designed to respond to economic and public health issues, through the prism of solidarity. The Article will then focus on the analysis of the Italian response to the pandemic through public purchasing techniques.