Synchronization and cyclicality of social spending in economic crises

This paper expands the analysis of the cyclical characteristics of social spending by providing information on its joint behaviour across OECD countries. With this aim we propose the use of dynamic factor analysis and recursive models to estimate synchronization and cyclicality of social policies wi...

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Bibliographic Details
Published inEmpirica Vol. 49; no. 4; pp. 1153 - 1187
Main Authors Ayala-Cañón, Luis, Delgado-Rodríguez, María Jesús, De Lucas-Santos, Sonia
Format Journal Article
LanguageEnglish
Published New York Springer US 01.11.2022
Springer Nature B.V
Subjects
Business cycles
Cooperation
Coronaviruses
COVID-19
Econometrics
Economic crisis
Economic stabilization
Economics
Economics and Finance
Emerging markets
European Integration
Expenditures
Factor analysis
Fiscal policy
Industrial Organization
International Economics
International finance
International organizations
Macroeconomics/Monetary Economics//Financial Economics
Market economies
Original Paper
Public Finance
Social policy
Stabilization
E62
Fiscal policy
Business cycle
F44
Social spending
C38
Factor models
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Summary:This paper expands the analysis of the cyclical characteristics of social spending by providing information on its joint behaviour across OECD countries. With this aim we propose the use of dynamic factor analysis and recursive models to estimate synchronization and cyclicality of social policies within a broad perspective. By considering the synchronization of social spending it is possible to assess the short-run characteristics of the joint response to changes in the economic cycle. We find that synchronization of social spending was only possible for advanced economies, achieving the highest countercyclical stabilization effect during the Global Financial Crisis. Emerging market economies are not able to join the synchronized response, maintaining independent and, in most cases, procyclical stances in the behaviour of their social policies.
Bibliography:ObjectType-Article-1
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Responsible Editor: Jesus Crespo Cuaresma.
ISSN:0340-8744
1573-6911
DOI:10.1007/s10663-022-09545-w