Determinants of Government Expenditures: New Evidence From Disaggregative Data

Dao, Minh Quang

doi:10.1111/j.1468-0084.1995.tb00027.x

Cited by 13 publications

(11 citation statements)

References 4 publications

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“…26 26 The time‐period dummy variables are specified as (0, 1), however. The double‐log specification follows others such as Dao (1995), Fosu (2008), Gbesemete and Gerdtham (1992), and Ouattara (2006). Results based on the linear and quadratic (with respect to PREDSR ) specifications show similar importance of the debt‐servicing variable and are available upon request; however, the log‐log specification appears to provide the best fit and additionally yields coefficients (elasticities) that are comparable across variables. …”

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confidence: 89%

“…A number of studies have examined the relationship between government spending and revenues in developing countries (Bleaney et al , 1995; Lim, 1983), while others focus on the determinants of government expenditures (Dao, 1995; Fielding, 1997). Studies on the fiscal implications of external inflows in low‐income developing countries tend, however, to emphasize the role of external aid rather than of debt (Cashel‐Cordo and Craig, 1990; Devarajan, Rajkumar, and Swaroop, 1998; Feyzioglu, Swaroop, and Zhu, 1998; Gang and Khan, 1990; Gbesemete and Gerdtham, 1992; Ouattara, 2006).…”

Section: Introductionmentioning

confidence: 99%

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The External Debt‐Servicing Constraint and Public‐Expenditure Composition in Sub‐Saharan Africa

Fosu¹

2010

African Development Review

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In the light of the current global financial and economic crises, how would governments in sub-Saharan Africa (SSA) allocate their budgets across sectors in response to a binding debt-servicing constraint? Within a framework of publicexpenditure choice, the present paper estimates constraint-consistent debt-service ratios and employs them in a Seemingly Unrelated Regression involving a five-year panel for up to 35 African countries over 1975-94, a period preceding the Highly Indebted Poor Countries (HIPC) initiatives. While observed debt service is found to be a poor predictor of expenditure allocation, constraining debt servicing shifts spending away from the social sector, with similar impacts on education and health. The implied partial elasticity of the sector's expenditure share with respect to debt is estimated at 1.5, the highest responsiveness by far among all the explanatory variables considered, including external aid. Thus, if the social sector is to be protected, sufficient debt relief for SSA countries should be pursued.A.K. Fosu 22. The debt service ratio, expressed as a proportion of exports, is employed to reflect the usual concept that it is export earnings, rather than GDP, that define the foreign-exchange constraint. Note also that other specifications were experimented with, but the linear appeared to provide the best fit.23. By 'noise', it is meant that the debt-servicing ratio is a poor indicator of the debt burden.24. This is because, as is well known in the statistical literature, a larger standard deviation of an explanatory variable translates to a lower standard error of the associated estimated coefficient.25. Note, with inclusion of T, that the specification becomes a one-way temporal fixed-effects model.26. The time-period dummy variables are specified as (0, 1), however. The double-log specification follows others such as Dao (1995), Fosu (2008, Gbesemete and Gerdtham (1992), and Ouattara (2006). Results based on the linear and quadratic (with respect to PREDSR) specifications show similar importance of the debt-servicing variable and are available upon request; however, the log-log specification appears to provide the best fit and additionally yields coefficients (elasticities) that are comparable across variables.27. The set of equations that include the social-sector expenditure variable, GESS, and the non-social sectors is estimated, and then the set with the disaggregated social-sector variables, GEE and GEH, together with the non-social sectors is also estimated. Note that the estimates for the non-social sector expenditures are identical between the two sets of equations.28. Note that not all functional sectors are represented here. The expenditure shares add up to 88 per cent; there is a residual 'other' category that is excluded from the SUR estimation, as it should be in order to render the system estimable.

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confidence: 89%

Section: Introductionmentioning

confidence: 99%

The External Debt‐Servicing Constraint and Public‐Expenditure Composition in Sub‐Saharan Africa

Fosu¹

2010

African Development Review

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“…Similarly, a rise in the proportion o f young people affects the demand for education spending (Marlow and Shiers 1999). Structural differences, such as the degree o f urbanization or population density, also affect government spending (Dao 1995). Dao found that population density has a positive influence on per capita expenditures on housing, social security and welfare, and education in developed economies.…”

Section: The Determination Of Government Expendituresmentioning

confidence: 99%

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

Curry¹

2009

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“…The existing literature can assist. In particular, Dao's (1995) results indicate that per capita income and population density are significantly related to variations in levels of government expenditure on defense, housing, social security and welfare, education, and health across nations. However, the level of urbanization appears to influence only government spending on social security and welfare.…”

Section: Government Social Programsmentioning

confidence: 94%

“…To address the potential estimation bias created by this endogenous relationship, the variables govhealth (and govtotal) are treated as endogenous variables in Equation (1). Variables used to identify the equations for govhealth (and govtotal) include population density, inflation, the percentage of the population older than 65 (see Dao, 1995;Rivera and Currais, 1999), and all exogenous variables from Equation (1). 9…”

Section: Methodology and Datamentioning

confidence: 99%

A Cross‐National Study of Government Social Insurance as an Alternative to Tort Liability Compensation

Kerr

Schmit

2009

J of Risk & Insurance

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Litigation rates in the United States have long been considered out of proportion with the remainder of the world, leading to a good deal of economic research trying to understand the causes. Much of that literature has focused on lawyer compensation rules and availability of general damage awards. Another possible reason for differences in national litigation rates is the relative generosity of government social programs. Using a sample of 24 countries over a 12-year period, we test the relationship between the size of government social program payments and liability costs as measured by liability insurance premiums, and find a strong negative relationship, controlling for income, accident rates, and a variety of other factors. Copyright (c) The Journal of Risk and Insurance, 2009.

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Determinants of Government Expenditures: New Evidence From Disaggregative Data

Cited by 13 publications

References 4 publications

The External Debt‐Servicing Constraint and Public‐Expenditure Composition in Sub‐Saharan Africa

The External Debt‐Servicing Constraint and Public‐Expenditure Composition in Sub‐Saharan Africa

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

A Cross‐National Study of Government Social Insurance as an Alternative to Tort Liability Compensation

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