Is social expenditure responsible for recent rise in public debt in OECD countries?

ABSTRACT

In developed economies, social expenditure is alleged to cause the rise in public debt over the last three decades. With dynamic panel data of 34 OECD countries from 1980 to 2014, we find robust evidence that the rise in public debt is not attributable to social expenditure.

KEYWORDS:

• Social expenditure
• public debt
• public debt in OECD countries
• banking crisis

JEL CLASSIFICATION:

• H63
• H53
• E62

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ In detail, among the widely used 10 categories’ government expenditure by function, ‘social protection’ provides data of social expenditure.

² For instance, with dynamic panel data on member countries of OECD and North Atlantic Treaty Organization over the periods of 1988–2009, Alexander (2013) show that defence expenditure raised public debt.