Public Debt and Social Expenditure: Friends or Foes?
By Eduardo Lora, M. Olivera. 2006
124 citations recorded by the source corpus.
This paper assesses the effects of total public debt (external and domestic) on social expenditure worldwide and in Latin America using an unbalanced panel of around 50 countries for the period 1985-2003. The most robust and important finding is that higher debt ratios do reduce social expenditures, as popular opinion holds. Debt displaces social expenditures not so much because it raises the debt burden, but because it reduces the room (or the appetite) for further indebtedness. Loans from multilateral organizations like the World Bank or the Inter-American Development Bank do not seem to ameliorate the adverse consequences of debt on social expenditures. In accordance with popular wisdom, our results indicate that defaulting on debt obligations does help to increase social expenditures. The main policy implication is that there is no better way to protect social expenditures than to avoid over-indebtedness, especially in Latin America.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/d7d02f66c454eb28ab23436d514331e17274e5cc
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Citations in the corpus
- Targeting of Transfers in Developing Countries: Review of Lessons and Experience (2004, background): “In part, this can be accomplished by spending on items such as universal primary education (van de Walle 1998) that reach a wide swath of society, including the poor.”
- The Targeting of Transfers in Developing Countries: Review of Experience and Lessons (2004, background): “In part, this can be accomplished by spending on items such as universal primary education that reach a wide swath of society including the poor (van de Walle, 1998).”