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Composition of public expenditures and macroeconomic performance in the European Union

Author

Listed:
  • Jesus Ferreiro

    (University of the Basque Country, Spain)

  • Maribel García del Valle

    (University of the Basque Country, Spain)

  • Carmen Gómez

    (University of the Basque Country, Spain)

Abstract

The objective of the paper is to test the existence of a relationship between the composition of public expenditures and the macroeconomic outcomes (GDP rate of growth, and unemployment and inflation rates) of the European Union member states during the period 1995-2007. We study the existence of clusters of countries with similar structures of public expenditure using multiple factorial analysis and principal component analysis techniques, and we compare the macroeconomic outcomes of the clusters obtained using statistics test of equality of means. The outcomes show that there is no evidence of the existence of a relationship between the structures of the public expenditure and the macroeconomic performances. This leads us to conclude that there is no single optimum model of public spending that warrants the best macroeconomic performance

Suggested Citation

  • Jesus Ferreiro & Maribel García del Valle & Carmen Gómez, 2012. "Composition of public expenditures and macroeconomic performance in the European Union," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 9(1), pages 109-128.
    • Handle: RePEc:elg:ejeepi:v:9:y:2012:i:1:p109-128
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    More about this item

    Keywords

    Â European Union; composition of public expenditures; economic performance; productive expenditures; cluster analysis;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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