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Synchronization and cyclicality of social spending in economic crises

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https://econpapers.repec.org/scripts/redir.pf?u=http%3A%2F%2Flink.springer.com%2F10.1007%2Fs10663-022-09545-w;h=repec:kap:empiri:v:49:y:2022:i:4:d:10.1007_s10663-022-09545-w
Time Added
2022/11/21 19:29
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Factor Model
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Authors
Luis Ayala-Cañón María Jesús Delgado-Rodríguez and Sonia De Lucas-Santos Luis Ayala-Cañón: UNED María Jesús Delgado-Rodríguez: Universidad Rey Juan Carlos Sonia De Lucas-Santos: Universidad Autónoma de Madrid C/ Francisco Tomás Y Valiente
Abstract
Abstract 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.
Keywords
Social spending ; Factor models ; Business cycle ; Fiscal policy (search for similar items in EconPapers)
Year Published
2022
Series
Empirica 2022 vol. 49 issue 4 No 9 1153-1187
Rank
0.74
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