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The effect of public social expenditure on imports

Author

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  • Carlos Garcimartín
  • Arnoldo L. Marmolejo
  • Carlos Eggers

Abstract

This paper studies the effect of social expenditure on imports. In doing so, it uses cross-country panels of the world economy to estimate an augmented balance-of-payments-constrained growth model that takes into account social spending. The results show that social expenditure reduces imports and offsets the negative effect it could have on the balance of trade through its effect on exports. We also find that for OECD countries, education spending is relevant to imports but not to exports, for which the most relevant component is spending on social protection (old-age and unemployment benefits). This result is particularly relevant for development policy in countries with low social expenditure.

Suggested Citation

  • Carlos Garcimartín & Arnoldo L. Marmolejo & Carlos Eggers, 2023. "The effect of public social expenditure on imports," Review of Keynesian Economics, Edward Elgar Publishing, vol. 11(3), pages 377-399, July.
    • Handle: RePEc:elg:rokejn:v:11:y:2023:i:3:p377-399
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    More about this item

    Keywords

    imports; education; social expenditure;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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