The Fiscal Vulnerability of Public Social Expenditures: Is Latin America Different?

18 Pages Posted: 8 Jul 2009

See all articles by Eduardo A. Lora

Eduardo A. Lora

Inter-American Development Bank (IDB) - Research Department

Date Written: June 1, 2009

Abstract

An unbalanced panel data of around fifty countries between 1985 and 2003 is used to estimate the vulnerability of public social expenditures (health and education) to other fiscal variables. The database allows comparisons between Latin America and the rest of developing countries. Public social expenditure is significantly lower in Latin America as share of GDP, although it has a higher share in primary expenditure. Public social expenditures in Latin America are more vulnerable to debt service, but are less sensible to changes in other types of public expenditure. As in other regions in the developing world, public social expenditure in Latin America shrinks when public debt stock increases. This effect is higher with multilateral debt obligations. In Latin America, debt defaults reduce the share of public social expenditures in total primary public expenditure.

Note: Downloadable document is in Spanish.

Keywords: Public Social Expenditure, Public Debt, Latin America, Primary Expenditures, Debt Services, Multilateral Debt, Defaults

JEL Classification: H51, H52, H63, F34, F53

Suggested Citation

Lora, Eduardo A., The Fiscal Vulnerability of Public Social Expenditures: Is Latin America Different? (June 1, 2009). Revista de Análisis Económico - Economic Analysis Review, Vol. 24, No. 1, 2009, Available at SSRN: https://ssrn.com/abstract=1431098

Eduardo A. Lora (Contact Author)

Inter-American Development Bank (IDB) - Research Department ( email )

1300 New York Ave., NW
Washington, DC 20577
United States
202-623-1271 (Phone)
202-623-2481 (Fax)

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