Types Of Public Spending Research Articles

Rente naturelle et composition des dépenses publiques

Résumé Cet article cherche à mettre en évidence l’impact de la rente naturelle sur la composition des dépenses publiques. Notre hypothèse est la suivante. Lorsque la qualité institutionnelle est mauvaise, le pouvoir exécutif dispose de marges de manœuvre plus importantes dans l’allocation des fonds publics. La composition des dépenses publiques est alors biaisée en faveur de celles qui offrent le plus de bénéfices politiques et de celles qui sont le plus valorisées par les dirigeants. Notre argumentation s’appuie sur le modèle de cycle politico-budgétaire de Drazen et Eslava (2005a). Dans ce modèle, les responsables politiques cherchent à influencer les citoyens en manipulant la composition des dépenses publiques (et non leur niveau). En utilisant les données sur la rente tirée des ressources naturelles compilées par la Banque mondiale et en construisant des données sur les produits agricoles de base, nous estimons un modèle à effets fixes dans lequel nous cherchons à expliquer la part d’une catégorie de dépenses, dans les dépenses publiques totales, par un certain nombre de variables parmi lesquelles se trouve une mesure de la rente. La présence de rente semble associée à un accroissement des dépenses courantes notamment des subventions. En revanche, l’existence de rente naturelle n’a pas d’impact significatif sur la part des dépenses en capital, elle semble même associée à une réduction des dépenses consacrées à l’infrastructure économique.

Public Expenditures, Growth, and Poverty: Lessons from Developing Countries

DOl: 10.1355/ae26-2k Public Expenditures, Growth, and Poverty: Lessons from Developing Countries. Edited by Shenggen Fan. Baltimore: The Johns Hopkins University Press, 2008. Pp. 249. The introductory chapter begins by noting that More than 1 billion people around the globe still live on less than US$1 a day as measured in purchasing power parity in 2001. Over the past 20 years, rapid economic growth in East Asia has reduced the total number of poor people from 800 million in 1981 to 270 million in 2001. In South Asia, during the same period the total number of poor people declined only marginally, from 480 million to 430 million. (p. 1). Furthermore, on both economic and moral grounds, currently practised policies and programmes aimed at poverty reduction are not sufficient to reduce human deprivation to more acceptable levels. is obvious, therefore, that a 'business as usual' approach is wholly inadequate. Instead, a more effective poverty alleviation strategy is urgently required in recognition of the fact that persistent poverty and malnutrition result in irreversible costs to human and economic development. (p-1). Coady and Fan make numerous key points about using public resources as a core to alleviation strategies. They point out that public resources must be used efficiently and [t]his requires appropriate recognition of the existing administrative and institutional constrains in developing countries and the fact that capacity can be built up only gradually (p. 9). They argue that more effective ways of delivering public resources must be constructed and this means improving the abilities of community, non-governmental and private entities (supported by the state), and making certain that public projects are operationally and financially feasible and sustainable. They make the important point that micro resource allocations must be made within a strategy that takes a macro focus. Their point is that [although government expenditures are allocated to different sectors to achieve specific social or economic development objectives, their impact often goes beyond the targeted sector through their general equilibrium and economy wide effects. While adopting an economy wide approach is very data intensive and requires complicated modeling, ... it is important to understand how much bias will occur if general equilibrium effects are ignored. (p. 14). The volume's introduction provides a carefully thought-out foundation upon which six additional scholars join Coady and Fan in collectively producing chapters that focus on trends in, and the impact of public spending in developing countries; public investment's impact on growth and rural poverty; human capital expenditures aimed at the poor, social safety nets; and a special look at public spending, growth and poverty in subSaharan Africa (where the number of poor has almost doubled, from 160 million in 1981 to more than 300 million in 2001. The chapter by Fan, Bingxin Yu, and Anuja Saurkar highlight major trends in, and the composition of government expenditures ... across developing regions of African, Asia, and Latin America (p. 21). It analyses the determinants of the composition of government expenditures, the effects of such expenditures on gross domestic product, and how the expenditures impact agricultural growth and therefore rural poverty reduction. Their methodology requires a basic understanding of economic theory. However, those who wish to read the book while not having this background will nevertheless gain insights because the co-authors offer a readable narrative that captures the essence of the book's more technical work. That essence is sixfold. First, returns from public investments vary widely across different types of investments and regions including within the same country. Second, agricultural research, education and rural infrastructure are the three types of public spending that are most likely to promote agricultural growth and reduce poverty. …

How Does the Composition of Public Spending Matter?

Public spending has effects on growth and distribution that are complex to trace and difficult to quantify. But the composition of public expenditure has become the key instrument by which development agencies seek to promote economic development. In recent years, the development assistance to heavily indebted poor countries has been made conditional on increased expenditure on categories that are thought to be “pro-poor”. This paper investigates the conceptual foundations and the empirical basis for the belief that poverty can be reduced through targeted public spending. While it is widely accepted that growth and redistribution are important sources of reduction in absolute poverty, a review of the literature confirms the lack of an appropriate theoretical framework for assessing the impact of public spending on growth as well as poverty. The dangers of policy decisions that are not well grounded in theory and supported by empirical evidence are indicated. With regard to the impact of any given type of public spending, policy recommendations must be tailored to countries and be based on empirical analysis that takes account of the lags and leads in their effects on equity and growth and ultimately on poverty. The paper sketches out such a framework and provides some evidence as the first step in what will have to be a longer-term research agenda to provide theoretically and empirically robust and verifiable guidance to public spending policy.

Effects of government spending on private investment

This paper investigates the effects of military and non-military public expenditures on gross private investment using cointegration and error-correction analysis. The latter type of public spending is disagreggated into expenditures of infrastructure, consumption and other general government expenditures. The empirical evidence from four emerging European countries namely, Greece, Ireland, Portugal and Spain suggests that in some cases public capital spending stimulates investment, while in others it depresses it. Also, the results tentatively indicate that defence spending exerts no influence on private investment, thus adding to the ongoing controversy of the economic effects of military spending.

Does higher government spending depress private investment?

This paper explores the implications of military and nonmilitary government expenditures on gross private investment. The empirical investigation of the issue is carried out via cointegration and error–correction analyses. The second type of public spending is disaggregated into infrastructure, consumption and other general government expenditures. The evidence from four emerging European countries namely, Greece, Ireland, Portugal and Spain, suggests that in some cases public capital spending complements and stimulates investment, while in others it discourages it. Moreover, the results tentatively indicate that defense spending does not impact private investment, thus contributing to the continuing debate of the economic effects of military spending.

Tax revenue and the marginal cost of public funds in Sweden

We assess the welfare cost of raising a marginal unit of tax revenue in a balanced-budget, general-equilibrium framework. The calculated social cost of an increment of public funds is sensitive to both the specific type of tax increase and the type of public spending used on the margin. ‘Best-guess’ assumptions on labor supply elasticities yield marginal costs of public funds for different fiscal mixes of between 0.67 and 4.51 at prevailing tax rates in Sweden. Alternative labor supply assumptions well within the range of current estimates substantially affect the results and can imply infinite marginal welfare costs. Marginal welfare costs are also sensitive to assumptions about both the income and substitution effects of labor supply.