Spending Programs Research Articles

Substitution Between Private and Government Consumption in a Currency Area: The Case of the CFA Franc Zone

The current study aims at investigating the relationship between private and government consumption within CFA franc zone. In fact, since the decade 2000, most of these countries have launched ambitious spending programs in order to become emergent in the 2035 horizon. For this aim, we applied the cointegration approach of Ogaki (1992) and Ogaki and Park (1997) using panel data and country level analyses for the period 1985–2019. Results from the two methodologies indicate that private consumption and public expenditure are better described as Edgeworth-Pareto substitutes. Conventionally, this means that an increase in government spending decreases the marginal utility of private consumption. Consequently, fiscal stimuli in CFA franc countries are harmful since they crowd out the private consumption. However, in case these countries have to face a fiscal consolidation, the substitutability pattern between private and public consumption is likely to moderate the contractionary impact of cuts in government consumption.

Taxing Uber

Ride-hailing applications create new challenges for governments providing transit services, but also create new opportunities to raise tax revenue. To shed light on the effect of taxing or subsidizing ride-hailing services, we extend a pseudo-monocentric city model to include multiple endogenously chosen transportation modes, including ride-hailing applications and endogenous car ownership. We show that most tax and spending programs that cities have currently adopted mildly increase public transit usage. However, the model predicts more significant increases in public transit ridership when ride-hailing applications are subsidized as a “last-mile” provider. Our model indicates that whether ride-hailing services and public transit are substitutes or complements is a policy choice.

Government social protection programme spending and household welfare in Lesotho

AbstractLesotho has notably high levels of poverty and inequality despite a high level of government spending on social protection programmes. We assess the performance of this spending in reducing consumption poverty and inequality, applying benefit incidence and microsimulation methods to 2017/2018 household survey data. We investigate the distributional effects of actual spending as well as those of a hypothetical alternative in which the spending is targeted through a proxy means test (PMT) formula used by the government for some programmes. We find that government spending on social protection programmes in Lesotho substantially reduces poverty and inequality. For most programmes, the hypothetical alternative of targeting spending to poorer households through the government's PMT formula would have no better distributional effects than current programme spending. The exception is postsecondary education bursaries, which are costly and regressive. Retaining bursaries only for poorer students, and reallocating the outlay this saves to a transfer targeted to poorer households through the government's PMT formula, could reduce poverty and inequality significantly.

Why Are Some Value-Based Programs Successful?

Original Investigation Participation in a Value-Based Insurance Design Program and Health Care Spending and Utilization Hui Zhang, PhD; David W. Cowling, PhD

Nonlinear effects of public debt on economic growth in Nigeria.

The COVID-19 pandemic induced governments all over the world to momentarily accumulatehigher levels of public debt in order to invest in deficit spending and social protection programs to tackle the anticipated economic slump. The Nigerian government has borrowed heavily from domestic and foreign sources in order to resolve thegrowing budget deficits and return the economy to a sustainable growth trajectory. Previous studies frequently made the incorrect assumption that the relationship between public debt and growth is linear and symmetric, leading to empirical resultsthat is frequently disputed and imprecise. This study's main objective is to examine the asymmetric impact of public debt on economic growth in Nigeria from 1980 to 2020 using the Nonlinear Autoregressive Distributed Lag method. Empirical evidence indicated that external debt have a significant positive and symmetric impact on economic growth in the long and short run, while debt service payment supporting the debt overhang hypothesis activated a symmetric effect that stifle growth. Domestic debt retarded growth asymmetrically in the short term and linearly over the long term. Foreign reserve holding, on the other hand, had an asymmetric long-run influence and a symmetric short-run impact on growth motivation. To mitigate the negative effects of unsustainable public debt, the study advocated for fiscal reforms that effectively reduce deficit financing to keep the level of government debt low and be able to respond robustly to an economic shock, improve domestic revenue generation and infrastructure spending, and strengthen governance practices and institutions.

THE IMPACT OF ELIGIBILITY FOR MEDICAID VERSUS SUBSIDIZED PRIVATE HEALTH INSURANCE ON MEDICAL SPENDING, SELF-REPORTED HEALTH, AND PUBLIC PROGRAM PARTICIPATION.

We use a regression discontinuity design to understand the impact of a sharp change in eligibility for Medicaid versus subsidized marketplace insurance at 138 percent of the federal poverty line on coverage, medical spending, health status, and other public program participation. We find a 5.5 percentage point shift from Medicaid to private insurance, with no net change in coverage. The shift increases individual health spending by $341 or 2 percent of income, with larger increases at higher points in the spending distribution. Two-thirds of the increase is from premiums and one-thirdfrom out-of-pocket medical spending. Self-rated health and other public program participation appear unchanged. We find no evidence of bunching below the eligibility threshold, which suggests either that individuals are willing to pay more for private insurance or that optimization frictions are high.

The social determinants of national tuberculosis incidence rates in 116 countries: a longitudinal ecological study between 2005–2015

BackgroundAccelerating declines in tuberculosis (TB) incidence is paramount for achieving global goals set for 2030 by the Sustainable Development Goals and the End TB Strategy. The aim of this study was to identify key country-level social determinants of national TB incidence trends.MethodsThis longitudinal ecological study used country-level data extracted from online databases from the period 2005–2015. We used multivariable Poisson regression models allowing for distinct within- and between-country effects to estimate associations between national TB incidence rates and 13 social determinants of health. The analysis was stratified by country income status.ResultsThe study sample included 48 low- and lower-middle-income countries (LLMICs) and 68 high- and upper-middle income countries (HUMICs), with a total of 528 and 748 observations between 2005–2015, respectively. National TB incidence rates declined in 108/116 countries between 2005–2015, with an average drop of 12.95% in LLMICs and 14.09% in HUMICs. Between LLMICs, higher Human Development Index (HDI), social protection spending, TB case detection, and TB treatment success were associated with lower TB incidence. Higher prevalence of HIV/AIDS was associated with higher TB incidence. Within LLMICs, increases in HDI over time were associated with lower TB incidence rates. Between HUMICs, higher HDI, health spending, and diabetes prevalence were associated with lower TB incidence, whereas higher prevalence of HIV/AIDS and alcohol-use were associated with higher TB incidence. Within HUMICs, increases in HIV/AIDS and diabetes prevalence over time were associated with higher TB incidence.ConclusionsIn LLMICs, TB incidence rates remain highest in countries with low human development, social protection spending and TB programme performance, and high rates of HIV/AIDS. Strengthening human development is likely to accelerate declines in TB incidence. In HUMICs, TB incidence rates remain highest in countries with low human development, health spending and diabetes prevalence, and high rates of HIV/AIDS and alcohol use. Here, slowing rising rates of HIV/AIDS and diabetes is likely to accelerate declines in TB incidence.

Cost‐effectiveness of a ‘Housing First’ programme implemented in Spain: An evaluation based on a randomised controlled trial

AbstractIn the last decades, Housing First model has become a feasible alternative to the traditional “staircase” systems in caring for the most vulnerable homeless people. The analysis that we present in this work is referred to Hábitat, a pioneering HF programme in Spain, which has been evaluated attending to both costs and outcomes. A randomised controlled trial was carried out and the collected data was explored through a Cost‐Effectiveness Analysis (CEA), including the estimation of Incremental Cost‐Effectiveness Ratios (ICER) and acceptability thresholds of the programme's spending. The results highlight the capacity of the programme to significantly improve the participants' life satisfaction levels, reduce the number of homeless nights, and increase the rate of institutional coverage. Even though the programme involves significant short‐term expenditure on accommodation, positive effects in net terms are demonstrated supporting the usefulness and viability of HF model.

Abstract WMP38: One Year Medicare Spending On Beneficiaries In Atrial Fibrillation Not Being Treating With Long-term Anticoagulants Experiencing A Hospitalization For Ischemic Stroke

Background: It is well known that individuals in atrial fibrillation (AF) who are not using anticoagulants are at higher risk of Ischemic Stroke (IS). These hospitalizations result in the utilization of significant healthcare resources in addition to reducing patients’ quality of life. The purpose of this study is to estimate how much the Medicare program spends treating a Medicare beneficiary (MB) with AF who are not being anticoagulated with an IS hospitalization and the 12-months following discharge. Method: The study population consisted of all MBs in the fee-for-service program who had a hospitalization for IS and were discharged between January 1, 2018 to December 31, 2018. A total of 50,509 MBs met the study inclusion criteria and were not excluded due to prior history of stroke or on long-term anticoagulants. The study period for accumulating Medicare spending at healthcare facilities is for the index hospitalization and all facility claims that occurred within 12-months of the index hospital discharge date. Results: Average total Medicare spending per MB for the study population was $46,867±$49,212 resulting in total Medicare spending of nearly $2.5 billion during the study period. Highest average spending per MB was for hospital services $25,848 (of which $15,790± $20,984 occurred during the index hospitalization and $10,058±$21,956 during readmission during the follow-up period. The Medicare program also spent over $3,000 per study patient at skilled nursing facilities ($8,131±$14,979), rehabilitation facilities ($5,538±$12,739), and outpatient facilities or emergency departments ($3,056±$7,495). At least, 19% of MB died during the study period. Medicare spent $25,397±$30,259 on those MBs that died during their index hospitalization and $67,276±$65,021 on those MBs that survived their index IS hospitalization but died during the follow-up period. Conclusion: MBs with AF who are not being treated with anticoagulants and suffer an ischemic stroke result in one-year Medicare Part A program spending of approximately $47,000 per person compared to the average Medicare spending for all services of approximately $12,000 per beneficiary in 2018. Identification of MB in AF and treatment with anticoagulants would save CMS significant dollars.

The asymmetric effect of fiscal policy on private consumption and private investment over a business cycle: Evidence from Sub‐Saharan African countries

AbstractThis study examines the response of private consumption and private investment to an exogenous shock of fiscal policy and estimates the size of fiscal multipliers during periods of economic slacks and positive output gap. Panel vector autoregressive (VAR) estimation technique is performed on a sample of 18 Sub‐Saharan African (SSA) countries for the period 2000–2018. The study finds that the output’s fiscal impact multiplier is larger during contractions than during expansion. Furthermore, in contractions, the fiscal multipliers are 0.06% for private consumption and 0.6% for private investment. Meanwhile, in expansions, they are −0.03 for private consumption and −0.04% for private investment. The findings of this study are consistent with the results of previous studies predicting Keynesian views. Thus, to earn sizable, persistent, and long‐lasting effects through fiscal policy, this study recommends that spending programs should account for countercyclical fiscal policy and consider consumption and investment decisions before implementation. Moreover, the fiscal spending interventions tend to target rule‐of‐thumb households and financially constrained firms.

Assessing Wind Energy Projects Potential in Pakistan: Challenges and Way Forward

Energy is the driver of the socioeconomic growth and development of a country. In the pursuit of available and affordable sources of energy, nations around the world have forgotten the sustainability angle and are facing an energy crisis. The developing world has initiated development plans in an unsustainable way, causing a demand–supply gap and leading to very high energy prices. Renewable energy gives us a solution to this circular crisis. The recent world has seen significant investment in renewables, particularly in the wind energy sector. The investment was initiated as a government spending program, but is now taken up by the private sector. The current study presents a thorough analysis of the prospects for wind energy and the means and measures required to fully capacitate the sector in Pakistan. In Pakistan’s three largest provinces, there is tremendous potential for wind energy, which requires proper utilization and exploration for sustained socioeconomic development. This study is based on the mixed-methods approach. In the first phase, content analysis was caried out using the systematic literature review (SLR) technique. Relevant content analysis was performed using the PRISMA diagram. A total of two hundred and thirty-nine (239) documents were scanned; however, only eighty-two (82) were included after the removal of duplications and irrelevant documents. Moreover, short interviews were conducted with entrepreneurs, and themes have been prescribed. The study found that commercially feasible wind energy potential is particularly abundant in Pakistan’s Sindh and Balochistan regions. The country’s diverse geography makes it ideal for wind turbine installations at various sites. The renewable energy policy should be revisited to incentivize the use of wind energy to ensure the nationally determined contributions (NDCs)’ commitments are assured to achieve sustainable development by 2030. Pakistan has seen rapid development in the wind energy sector with around 4 percent of electric power being generated through wind farms in just over 13 years. In order to exploit the potential, there is a need for significant public and private joint efforts.

Abstract 13439: Trends in Spending for P2Y12 Inhibitors by Medicare and Medicaid

Introduction: Use of a P2Y12 inhibitor (P2Y12i) is standard of care for many conditions related to atherosclerotic cardiovascular disease. The more potent P2Y12is, prasugrel and ticagrelor, lead to improved outcomes in MI patients compared to clopidogrel. Generic prasugrel became available in 2017, while ticagrelor remains brand-name. The impact of generic P2Y12i availability on Medicare and Medicaid program spending is unknown. Methods: We evaluated P2Y12i total claims and inflation-adjusted spending in millions (M) of dollars using the 2015-2020 Medicare Part D and Medicaid prescription drug spending datasets. Total cost savings were estimated by switching from ticagrelor to generic prasugrel and clopidogrel. Results: From 2015 to 2020, total P2Y12i spending increased by Medicare (543M to 604M) and Medicaid (61M to 83M), although total claims decreased. In 2015, generic clopidogrel was the most prescribed P2Y12i within the Medicare program (94.2% of claims) and contributed the largest portion of total costs (45.0%). By 2020 ticagrelor contributed to most Medicare costs for P2Y12is (62.0%) despite constituting only 6.9% of claims (Figure). Generic prasugrel constituted 2.2% of Medicare P2Y12i claims in 2020 and contributed to 6.0% of total costs. Total 2020 Medicare savings by switching from ticagrelor to generic prasugrel or clopidogrel would have been 270M and 361M, respectively. In Medicaid, brand-name prasugrel had the largest contribution to costs in 2015 (48.1%) and ticagrelor constituted the most costs in 2020 (80.3% with 9.8% of claims). Total 2020 Medicaid savings by switching from ticagrelor to generic prasugrel or clopidogrel would have been 59.0M and 65.5M in 2020, respectively. Conclusions: Brand-name ticagrelor constitutes > 60% of total 2020 P2Y12i costs in Medicare and Medicaid, despite being used in < 10% of claims. Use of generic prasugrel remains low, despite its efficacy and potential to reduce prescription drug spending.

Policy Forum: Tax Expenditures—Lessons from the Elimination of Ontario's Tuition and Education Tax Credits

Stanley Surrey and others have highlighted tax expenditures as being hidden forms of spending that can evade the type of analysis and scrutiny applied to direct spending programs, allowing inefficient and inequitable programs to persist. But there is only limited empirical evidence on differences in the persistence of similar programs in a tax measure compared to a direct spending form. The conversion of Ontario's education and tuition tax expenditures into a direct form of spending via the existing student aid program provides an interesting case study. As discussed in this article, although the tax credits had never been the subject of a value-for-money audit, the student aid program was reviewed in 2018 shortly after the changeover, to hearty criticism of its distributional effects despite its being less regressive than the tax credit versions. This led to substantial cuts in the program, in line with views on the persistence of tax expenditures.

Economic development program spending in the US: is there club convergence?

ABSTRACT This paper provides a novel investigation of whether budgetary spending on economic development programs converges across US states. States use a wide array of tax and subsidy programs to try to attract firms in a highly competitive environment. If states engage in strategic tax and incentive competition as previous literature suggests, we should expect economic development spending to converge over time. Using a national database of state ‘out of pocket’ economic development expenditures, we apply the panel convergence method developed by Phillips and Sul (2007, 2009) which endogenously identifies the number and members of convergence clubs. We find that states flock together in three spending clubs which reflect socioeconomic characteristics. The existence of multiple clubs with heterogeneous spending patterns reveals the complexity of state-level budgetary efforts put towards economic development programs.

Making Social Spending Work by Peter H. Lindert

<i>Making Social Spending Work</i> by Peter H. Lindert

The Democratic Limits of Populist Politics

The Democratic Limits of Populist Politics

Is a Minimal Federal European Constitution for the European Union Necessary? Some Preliminary Suggestions Using Public Choice Analysis

After overcoming the Coronavirus Pandemic with massive spending programs and the possibility of running a deficit at the EU level, a minimal Federal European Constitution is proposed, to provide a legal and democratic base for the European Union. Six basic elements of a future European federal constitution are developed: the European Commission should be turned into a European government and the European legislation should consist of a two-chamber system with full responsibility over all federal matters. Three further key elements are the subsidiarity principle, federalism and direct democracy, which would provide the possibility for European voters to participate actively in political decision making, to break political and interest group cartels, and to prevent unwanted shifting of responsibilities from EU member states to the European federal level.

Unemployment benefits, food insecurity, and supplemental nutrition assistance program spending

AbstractThis paper examines the effects of unemployment insurance (UI) expansions on household food insecurity in the United States using the Food Security Supplement to the Current Population Survey for 1999–2017. We exploit the plausibly exogenous variation in state maximum weekly UI benefits across states and over time. The two‐part model demonstrates that a $100 increase in state weekly UI benefits reduces the likelihood of food insecurity among UI‐eligible families by 5.6% and the severity of food insecurity conditional on being food insecure by 6.3%. We further present strong evidence of program substitution between UI and the Supplemental Nutrition Assistance Program (SNAP), which is the largest food assistance program with the stated goal of reducing food insecurity. Specifically, for every dollar spent on UI, 4–11 cents can be saved on SNAP, thereby reinforcing the social benefits of an UI expansion.

The Effect Of International Aid On Per Capita Income: A Panel Data Analysis

Poverty, a problem that has existed throughout the history of humanity and sought a solution, is a phenomenon that is struggled under the joint responsibility of world states, national and international organizations. As a result of the positive and economic developments after the World War II, with the implementation of social spending programs, a transition to a systematic structure has been achieved in the struggle against poverty. In this study, a panel data set covering the period 2004-2018 for 23 countries was constructed to examine the impact of international aid on per capita income. The study results show a positive relationship between the international aid, population, and human development index and per capita gross domestic product at the 5% significance level, a negative relationship between the unemployment rate and the Gini coefficient and per capita income at the 5% significance level. If the international aid increases by 1%, the per capita income increases by 0.08%, if the population increases by 1%, the per capita income increases by 1.45%, if the value of human development increases by 1%, the per capita income increases by 1.60%. If the unemployment rate increases by 1%, per capita income decreases by 0.15%; if the Gini coefficient increases by 1%, the per capita income decreases by 0.63%.

The Inequitable Distribution of Government Funds: The Case of COVID-19 Economic Injury Disaster Loans

The COVID-19 pandemic brought a wave of challenges to the U.S. economy, from skyrocketing unemployment to state-wide lockdowns which hampered many small businesses. GDP dropped by 8.9% in the second quarter of 2020, and susceptible industries such as Restaurants, Hotels, and Airlines faced the brute of these hardships. In response, the U.S. government initiated enormous Keynesian spending programs to inject liquidity into the economy and support businesses, establishing low interest rates and offering generous loan forgiveness. From March 2020 to June 2022, the government distributed nearly $4.5 trillion in total budgetary resources to mitigate the struggles faced by Americans. Specifically, the Small Business Administration (SBA) leveraged the Economic Injury Disaster Loans (EIDL) Program to aid small businesses. This study sought to determine whether government funding was equitably distributed on the county level, and whether they resulted in higher employment. The findings reveal inequitable distribution of government funds based on the size of the county (funding per capita or funding per laborer) that may be explained by inequitable COVID-19 impacts (more targeted spending in more urban areas with greater concentration of businesses). Moreover, negative correlations exist between the number of direct payments and the unemployment rate, and the total funding amount and unemployment rate.