GLOBAL ECONOMIC CRISIS AND EFFECTIVENESS OF PUBLIC SPENDING: THE EU PRACTICE

Year 2016, Volume: 3 Issue: 3, 139 - 158, 29.07.2016

Simla Güzel İşın Kırışkan Çetin

https://doi.org/10.15637/jlecon.131

Abstract

The financial crisis of 2008 affected the whole world and it had a negative impact on
economies. The effects of the crisis are still experienced in several nations. Especially high budget
deficits, public debt and unemployment problems caused a heated debate on public spending that was
increased to prevent economic recession in the post-crisis era. This study aims to discuss public
expenditure efficiency in the wake of global financial crisis. The study utilized a database including
the indicators of; Public Expenditures (as a dependent variable), Gross Domestic Product (GDP),
Gross Domestic Product Growth Rate, Unemployment Rate, Public Debt, Fiscal Deficit, Human
Development Index (HDI). HDI. We used panel regression analysis for 28 EU countries, and time
series analysis for the the top 10 countries in terms of per capita income for the period of 2000-2015.
:And this study argues that the high public spending did not affect the indicators used in this study in a
positive way. In addition, to this, Norway, Luxemburg and Germany showed best performance in the
post-crisis period.

Keywords

Global Crisis, Public Expenditure, EU Countries, Panel Data Analysis, Time Series Analysis.

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