Synchronization and cyclicality of social spending in economic crises
This paper expands the analysis of the cyclical characteristics of social spending by providing information on its joint behaviour across OECD countries. With this aim we propose the use of dynamic factor analysis and recursive models to estimate synchronization and cyclicality of social policies within a broad perspective. By considering the synchronization of social spending it is possible to assess the short-run characteristics of the joint response to changes in the economic cycle. We fnd that synchronization of social spending was only possible for advanced economies, achieving the highest countercyclical stabilization efect during the Global Financial Crisis. Emerging market economies are not able to join the synchronized response, maintaining independent and, in most cases, procyclical stances in the behaviour of their social policies.
Acknowledgements Luis Ayala and María Jesús Delgado acknowledge financial support from Comunidad de Madrid (H2019/HUM-5793). Funding Open Access funding provided thanks to the CRUE-CSIC agreement with Springer Nature.
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