Do governments re-prioritise spending?
First insights from COFOG data on public spending reallocation in OECD countries
This study investigates the capacity of governments to reallocate spending across
different functions of the government. It mobilises the COFOG dataset for the period
1996 - 2017, which allows comparing public spending mixes at detailed levels in ways
that are consistent across countries and over time.
Three main empirical findings are established. Firstly, countries differ in their
propensity to reallocate public spending across functions and countries that reallocate
more are also countries with sounder governance and tighter fiscal rules in place.
Secondly, obstacles to reallocation are identified, with governments avoiding nominal
cuts, especially in health and social expenditures. Thirdly, while the analysis underlines
some degree of convergence among OECD countries in terms of public spending allocation,
this convergence is not universal. A cluster of Nordic countries persists, and Greece
is identified as diverging from the rest of countries included in the sample.
Published on December 21, 2023
In series:OECD Economics Department Working Papersview more titles