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1. The Cyclical Behaviour of Government Spending for Social Protection: Is the OECD Methodology Robust?

Author:
Aleksandr Arsenev, Philipp Heimberger, and Torben Schütz
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Spending elasticities measure the reaction of different government spending components to the business cycle. They are important inputs for fiscal forecasts, and they are particularly relevant in the context of European Union (EU) fiscal rules, as elasticity estimates enter the estimation of fiscal space. This paper analyses the sensitivity of the estimation method used by the Organisation for Economic Co-operation and Development (OECD) and the European Commission to obtain government spending elasticities by focusing on 11 EU countries in the 1995-2020 period. Our results suggest that spending elasticities are sensitive to small variations in data and model specification. For most EU countries, we reject the assumption that only unemployment spending responds to cyclical variations. While unemployment spending is indeed a major driver of counter-cyclical social spending, other categories of social spending also show signs of responding to the business cycle.
Topic:
Budget, European Union, Finance, Macroeconomics, Public Debt, Social Spending, Public Spending, and Fiscal Deficit
Political Geography:
Europe, Greece, France, Poland, Germany, Denmark, Romania, Spain, Italy, Sweden, Austria, and Czechia

2. Does Economic Globalisation Affect Income Inequality? A Meta-analysis

Author:
Philipp Heimberger
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
A large volume of econometric literature has studied the impact of economic globalisation on income inequality around the world. However, reported econometric estimates vary substantially which makes it difficult to draw valid conclusions. This paper presents a quantitative summary and analysis of existing estimates regarding the globalisation-inequality relationship. We used a new data set consisting of 1254 observations from 123 peer-reviewed papers. By applying meta-analysis and meta-regression methods, we obtained several main findings. First, globalisation has a (small-to-moderate) positive impact on income inequality considering the total population of estimates. The average effect is robustly different from zero suggesting that globalisation increases income inequality. Second, while the effect of trade globalisation is small, financial globalisation shows a more sizable and significantly stronger inequality-increasing impact. Third, the cumulative evidence rejects theoretical accounts according to which economic globalisation reduces within-country income inequality in developing countries as the meta-analysis establishes an average inequality-increasing impact in both advanced and developing countries. Fourth, education and technology moderate the impact of globalisation on income inequality. Fifth, we tested for various other factors that could cause heterogeneity in the reported estimates including differences in the econometric specifications, the income inequality measures and data set used and publication characteristics.
Topic:
Globalization, Finance, Income Inequality, Macroeconomics, Trade, and Meta-analysis
Political Geography:
Global Focus

3. Measuring Economic Openness

Author:
Claudius Gräbner, Philipp Heimberger, Jakob Kapeller, and Florian Springholz
Publication Date:
12-2018
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper surveys existing measures of economic openness understood as the degree to which non-domestic actors can or do participate in a domestic economy. We introduce a typology of openness indicators which distinguishes between ‘real’ and ‘financial’ openness as well as between ‘de facto’ and ‘de jure’ measures of openness, and show that this classification indeed captures different dimensions of economic openness. The main contribution of the paper is to supply a comprehensive and novel data set of openness indicators available for interested researchers. Based on this effort, we analyse some trends in economic openness over time and provide a correlation analysis across indicators. Finally, we explore the practical implications of choosing from different openness measures within a growth regression framework and highlight that researchers should make the choice of the indicator based on explicit theoretical justifications that correspond to their specific research questions.
Topic:
Globalization, European Union, Finance, Economy, Trade, and Regional Economy
Political Geography:
Europe