The aim of this paper is to assess the ability of social spending to smooth output shocks and to provide stabilization. The results show that overall social spending is able to smooth about 16 percent of a shock to GDP. Among its subcategories, social spending devoted to Old Age and Unemployment...

Is the potency of fiscal policy lower for more open economies, as suggested by economic theory? Using annual data from the period 1951–2007, for 62 developed and developing economies, the paper’s empirical findings show that the effectiveness of fiscal policy is indeed reduced by an...