IDEAS home Printed from https://ideas.repec.org/a/aoq/ekonom/y2022i4p455-483.html
   My bibliography  Save this article

What we know and what we do not know about social security finance and macroeconomic stabilization? Evidence from EU countries

Author

Listed:
  • Alina Klonowska
  • Barbara Pawełek

Abstract

This study examines those variables that affect social security finances and those that affect the macroeconomic situation in the EU countries with a view to enabling stability to be maintained under changing conditions. A retrospective analysis, the bootstrap panel Granger causality test, the Pesaran CD test for cross-sectional dependence in panels and Pesaran’s CIPS test for unit roots in panels were employed to this end. These methodological tools were applied to panel data of EU countries. The research period was from 2000 to 2019 inclusive. The results reveal that the inclusion of selected macroeconomic variables in the model that predicts the values of the components that shape social security finances, and vice versa, increases the accuracy of the prediction. It is confirmed that the studied variables have a mutually stabilizing effect. This is essential for increasing the adaptability of social security systems to changing conditions and ensuring the long-term stability of financing benefits. This discovery is what distinguishes this study from those conducted on general government finance; two-way causal relationships in this field have never before been verified.

Suggested Citation

  • Alina Klonowska & Barbara Pawełek, 2022. "What we know and what we do not know about social security finance and macroeconomic stabilization? Evidence from EU countries," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 4, pages 455-483.
    • Handle: RePEc:aoq:ekonom:y:2022:i:4:p:455-483
    as

    Download full text from publisher

    File URL: https://ekonomista.pte.pl/pdf-156780-85032
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lambrecht, Stephane & Michel, Philippe & Vidal, Jean-Pierre, 2005. "Public pensions and growth," European Economic Review, Elsevier, vol. 49(5), pages 1261-1281, July.
    2. Michael Connolly & Cheng Li, 2016. "Government spending and economic growth in the OECD countries," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 19(4), pages 386-395, October.
    3. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    4. Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
    5. repec:wop:bodewp:218 is not listed on IDEAS
    6. Barro, Robert J, 1989. "The Ricardian Approach to Budget Deficits," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 37-54, Spring.
    7. Ant??nio Afonso & Christophe Rault, 2009. "Bootstrap panel Granger-causality between government spending and revenue in the EU," William Davidson Institute Working Papers Series wp944, William Davidson Institute at the University of Michigan.
    8. Pesaran, M. Hashem & Vanessa Smith, L. & Yamagata, Takashi, 2013. "Panel unit root tests in the presence of a multifactor error structure," Journal of Econometrics, Elsevier, vol. 175(2), pages 94-115.
    9. Giorgio Bellettini & Carlotta Berti Ceroni, 1999. "Is Social Security Really Bad for Growth?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(4), pages 796-819, October.
    10. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    11. Gechert, Sebastian & Paetz, Christoph & Villanueva, Paloma, 2021. "The macroeconomic effects of social security contributions and benefits," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 571-584.
    12. Agell, Jonas & Lindh, Thomas & Ohlsson, Henry, 1997. "Growth and the public sector: A critical review essay," European Journal of Political Economy, Elsevier, vol. 13(1), pages 33-52, February.
    13. Croissant, Yves & Millo, Giovanni, 2008. "Panel Data Econometrics in R: The plm Package," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 27(i02).
    14. Marcela Eslava, 2011. "The Political Economy Of Fiscal Deficits: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 25(4), pages 645-673, September.
    15. Olivier Blanchard & Roberto Perotti, 2002. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(4), pages 1329-1368.
    16. Croissant, Yves & Millo, Giovanni, 2008. "Panel Data Econometrics in R: The plm Package," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 27(i02).
    17. Christophe Rault & António Afonso, 2009. "Bootstrap panel granger-causality between government budget and external deficits for the EU," Economics Bulletin, AccessEcon, vol. 29(2), pages 1027-1034.
    18. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    19. Bağdigen, Muhlis & Çetintaş, Hakan, 2003. "Causality between Public Expenditure and Economic Growth: The Turkish Case," MPRA Paper 8576, University Library of Munich, Germany, revised 07 Dec 2003.
    20. Luciano Lopez & Sylvain Weber, 2017. "Testing for Granger causality in panel data," Stata Journal, StataCorp LP, vol. 17(4), pages 972-984, December.
    21. Michael Connolly & Cheng Li, 2016. "Government spending and economic growth in the OECD countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 19(4), pages 386-395, October.
    22. Emile Cammeraat, 2020. "The relationship between different social expenditure schemes and poverty, inequality and economic growth," International Social Security Review, John Wiley & Sons, vol. 73(2), pages 101-123, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mohammad Mafizur Rahman & Istihak Rayhan & Nahid Sultana, 2023. "How Does Electricity Affect Economic Growth? Examining the Role of Government Policy to Selected Four South Asian Countries," Energies, MDPI, vol. 16(3), pages 1-17, February.
    2. Mouna Ben Abdeljelil & Christophe Rault & Fateh Belaïd, 2023. "Economic growth and pollutant emissions: new panel evidence from the union for the Mediterranean countries," Economic Change and Restructuring, Springer, vol. 56(3), pages 1537-1566, June.
    3. Asta Ndongo & Ibrahima Thione Diop, 2021. "Economic and Monetary Integration in ECOWAS Countries: A Panel VAR Approach to Identify Macroeconomic Shocks," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 7(2), pages 61-87, December.
    4. Nurliyana Mohd Basri & Zulkefly Abdul Karim & Noorasiah Sulaiman, 2020. "The Effects of Factors of Production Shocks on Labor Productivity: New Evidence Using Panel VAR Analysis," Sustainability, MDPI, vol. 12(20), pages 1-23, October.
    5. Chakraborty, Saptorshee Kanto & Mazzanti, Massimiliano, 2021. "Renewable electricity and economic growth relationship in the long run: Panel data econometric evidence from the OECD," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 330-341.
    6. Rishan Adha & Cheng-Yih Hong & Somya Agrawal & Li-Hua Li, 2023. "ICT, carbon emissions, climate change, and energy demand nexus: The potential benefit of digitalization in Taiwan," Energy & Environment, , vol. 34(5), pages 1619-1638, August.
    7. Afonso, António & Coelho, José Carlos, 2022. "The role of fiscal policies for external imbalances: Evidence from the European Union," Economic Systems, Elsevier, vol. 46(2).
    8. Elton Beqiraj & Silvia Fedeli & Francesco Forte, 2018. "Public budgetary rules and GDP growth: An empirical study on OECD and twelve european countries," Southern Economic Journal, John Wiley & Sons, vol. 85(1), pages 170-188, July.
    9. Rajakaruna, Iwanthika & Suardi, Sandy, 2021. "The dynamic linkages between current account deficit and budget balance deficit in the South Asian region," Journal of Asian Economics, Elsevier, vol. 77(C).
    10. Chakraborty, Saptorshee Kanto & Mazzanti, Massimiliano, 2020. "Energy intensity and green energy innovation: Checking heterogeneous country effects in the OECD," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 328-343.
    11. Si Mohammed, Kamel & Abddel-Jalil Sallam, Osama Azmi & Abdelkader, Salim Bourchid & Radulescu, Magdalena, 2024. "Dynamic effects of digital governance and government interventions on natural resources management: Fresh findings from Chinese provinces," Resources Policy, Elsevier, vol. 92(C).
    12. Chengyonghui, Duan & Ni, Soh Wei & San, Ong Tze & Rahim, Norhuda BT Abdul, 2023. "What role public debt plays to moderate the influence of natural resources on financial development? Appraising Resource-Curse Hypothesis in MENA Region," Resources Policy, Elsevier, vol. 86(PA).
    13. Chletsos Michael & Roupakias Stelios, 2020. "The effect of military spending on income inequality: evidence from NATO countries," Empirical Economics, Springer, vol. 58(3), pages 1305-1337, March.
    14. Gianni Carvelli, 2023. "The long-run effects of government expenditure on private investments: a panel CS-ARDL approach," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 47(3), pages 620-645, September.
    15. Khan, Anwar & Chenggang, Yang & Hussain, Jamal & Kui, Zhou, 2021. "Impact of technological innovation, financial development and foreign direct investment on renewable energy, non-renewable energy and the environment in belt & Road Initiative countries," Renewable Energy, Elsevier, vol. 171(C), pages 479-491.
    16. Dobdinga Cletus Fonchamnyo & Ongo Nkoa Bruno Emmanuel & Gildas Dohba Dinga, 2021. "The effects of trade, foreign direct investment, and economic growth on environmental quality and overshoot: a dynamic common correlation effects approach," SN Business & Economics, Springer, vol. 1(10), pages 1-27, October.
    17. Ahmad, Mahmood & Jiang, Ping & Majeed, Abdul & Umar, Muhammad & Khan, Zeeshan & Muhammad, Sulaman, 2020. "The dynamic impact of natural resources, technological innovations and economic growth on ecological footprint: An advanced panel data estimation," Resources Policy, Elsevier, vol. 69(C).
    18. Shu, Haicheng & Wang, Yu & Umar, Muhammad & Zhong, Yifan, 2023. "Dynamics of renewable energy research, investment in EnvoTech and environmental quality in the context of G7 countries," Energy Economics, Elsevier, vol. 120(C).
    19. Wang, Chen & Xia, Mengli & Wang, Piao & Xu, Junjie, 2022. "Renewable energy output, energy efficiency and cleaner energy: Evidence from non-parametric approach for emerging seven economies," Renewable Energy, Elsevier, vol. 198(C), pages 91-99.
    20. Gangopadhyay, Partha & Jain, Siddharth & Bakry, Walid, 2022. "In search of a rational foundation for the massive IT boom in the Australian banking industry: Can the IT boom really drive relationship banking?," International Review of Financial Analysis, Elsevier, vol. 82(C).

    More about this item

    Keywords

    fiscal policy; social funds; macroeconomic factors; Granger causality;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aoq:ekonom:y:2022:i:4:p:455-483. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tomasz Kwarcinski (email available below). General contact details of provider: https://edirc.repec.org/data/pteeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.