Is the composition of public expenditures converging in EMU countries?

Abstract

The literature on fiscal policy is paying increasing attention to the impact of the composition of public expenditures on long-term economic growth. Public policy endogenous growth models recommend to change the composition of public expenditures to items considered as productive expenditures. Based on these models, European institutions are encouraging to increase the share of outlays, such as public investments, research and development, active labor market policies, and so on. This paper analyzes whether a convergence to a new pattern of public finances with a higher share of productive expenditures is arising in the euro zone.

Keywords:

• European Monetary Union
• productive public expenditures
• public expenditures
• quality of public finances