Inequality and public spending worldwide: A study with panel data and methodologies.

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Published: feb. 5, 2022

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Cecibel Jiménez
Carrera de Economía, Universidad Nacional de Loja, Loja, Ecuador
Jorge Flores-Chamba
Carrera de Economía, Universidad Nacional de Loja, Loja, Ecuador

Abstract

In the study of socioeconomic problems such as poverty and inequality, it is inevitable to analyze the role of the public sector; Hence, it is important to mention that, for example, in markedly unequal regions such as Latin America and Sub-Saharan Africa, final consumption by governments has shown an average growth rate of more than 2\% in the 2000-2020 period, according to World Bank data. . In this sense, the objective of this research is to examine the causal link between inequality and public spending for 89 countries during 1980-2016. Using cointegration techniques for panel data, the results found indicate the existence of a long-term equilibrium between the two variables worldwide and by groups of countries. Finally, the results of the causality test show that there is a two-way causality between inequality and public spending in high-income countries. In upper-middle, lower-middle, extremely low, and low-income countries, there is a one-way causality between inequality and public spending. One of the policy suggestions derived from this research is that in most of the countries analyzed, increasing public spending contributes to reducing inequality.

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How to Cite
Jiménez, C., & Flores-Chamba, J. (2022). Inequality and public spending worldwide: A study with panel data and methodologies. Revista Económica, 9(2), 43–54. Retrieved from https://revistas.unl.edu.ec/index.php/economica/article/view/1209
Issue
Vol. 9 No. 2 (2021): RVE Vol 9 (July - December 2021)
Section
RESEARCH ARTICLES
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