1292
Views
115
Downloads |
An analysis of COFOG expenditures in former Yugoslavian countries
Article | Year: 2023 | Pages: 233 - 254 | Volume: 47 | Issue: 2 Received: June 1, 2022 | Accepted: January 16, 2023 | Published online: June 12, 2023
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
|
|
Total
expenditures
|
General
public
services
|
Defence
|
Public order
and safety
|
Economic
affairs
|
Environmental
protection
|
|
Intercept
|
4.35
(1.55)
|
0.77
(1.8)*
|
0.22
(2.47)**
|
0.1
(1.18)
|
2.96
(3.93)***
|
0.05
(1.55)
|
|
Et-1
|
-0.11
(1.67)
|
-0.11
(1.8)*
|
-0.21
(2.92)***
|
-0.06
(1.6)
|
-0.54
(4.25)***
|
-0.16
(2.21)**
|
|
Housing and
community amenities
|
Health
|
Recreation,
culture
and religion
|
Education
|
Social
protection
|
|
Intercept
|
0.04
(0.61)
|
0.95
(2.28)**
|
0.08
(2.11)**
|
0.17
(0.92)
|
0.84
(1.47)
|
|
Et-1
|
-0.04
(0.75)
|
-0.17
(2.35)**
|
-0.1
(2.98)***
|
-0.06
(1.36)
|
-0.07
(1.74)*
|
Obs.: 53; Method: OLS. Note: ***, **, * indicate statistical significance at 1%, 5% and 10%, respectively. T-statistics computed using OLS residuals is reported in parenthesis.
|
|
Total
Expenditures
|
General
public services
|
Defence
|
Public
order and safety
|
|
Method
|
OLS
|
GMM
|
OLS
|
GMM
|
OLS
|
GMM
|
OLS
|
GMM
|
|
Output gap
|
-0.55
(-3.01)***
|
-0.67
(-4.11)***
|
-0.12
(-1.56)
|
-0.14
(-2.28)**
|
0.02
(1.4)
|
0.03
(1.49)
|
-0.02
(-1.24)
|
-0.03
(-2.41)**
|
|
Lagged
endogenous
|
0.37
(3.11)***
|
0.33
(7.33)***
|
0.5
(4.73)***
|
0.66
(3.71)***
|
0.77
(10.21)***
|
0.74
(7.84)***
|
0.63
(6.55)***
|
0.61
(3.14)***
|
|
R2
|
0.85
|
|
0.87
|
|
0.82
|
|
0.93
|
|
|
Individual
fixed effects
|
Yes
(0.0009)
|
|
Yes
(0.008)
|
|
Yes
(0.0717)
|
|
Yes
(0.0297)
|
|
|
Period fixed
effects
|
No
|
|
No
|
|
Yes
(0.0772)
|
|
No
|
|
|
Wald
|
0.0118
|
|
|
|
|
|
|
|
|
Pesaran CD
|
0.1350
|
|
|
|
|
|
|
|
|
B-G test
|
0.8532
|
|
|
|
|
|
|
|
|
Hansen test
|
|
0.3052
|
|
0.6803
|
|
0.6356
|
|
0.7494
|
|
A-B AR(2)
|
|
0.3101
|
|
0.6226
|
|
0.1620
|
|
0.1576
|
|
Observations
|
64
|
58
|
64
|
58
|
64
|
58
|
64
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic
affairs
|
Environmental
protection
|
Housing
and community amenities
|
Health
|
|
Method
|
OLS
|
GMM
|
OLS
|
GMM
|
OLS
|
GMM
|
OLS
|
GMM
|
|
|
Output gap
|
-0.07
(-0.48)
|
0.06
(0.51)
|
0.002
(0.22)
|
0.001
(0.15)
|
-0.01
(-0.45)
|
0.01
(0.27)
|
-0.07
(-2.57)**
|
-0.1
(-5.61)***
|
|
|
Lagged
endogenous
|
0.2
(1.59)
|
0.1
(0.68)
|
0.24
(2.16)**
|
0.48
(3.09)***
|
0.35
(3.13)***
|
0.3
(1.79)*
|
0.42
(3.56)***
|
0.12
(0.82)
|
|
|
R2
|
0.45
|
|
0.88
|
|
0.94
|
|
0.79
|
|
|
|
Individual
fixed effects
|
Yes
(0.0128)
|
|
Yes
(0.0000)
|
|
Yes
(0.0000)
|
|
Yes
(0.0029)
|
|
|
|
Period fixed
effects
|
No
|
|
No
|
|
No
|
|
No
|
|
|
|
Hansen test
|
|
0.8943
|
|
0.0810
|
|
0.1551
|
|
0.2843
|
|
|
A-B AR(2)
|
|
0.2414
|
|
0.2150
|
|
0.8262
|
|
0.1292
|
|
|
Observations
|
64
|
58
|
64
|
46
|
64
|
58
|
64
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recreation,
culture and religion
|
Education
|
Social
protection
|
|
|
Method
|
OLS
|
GMM
|
OLS
|
GMM
|
OLS
|
GMM
|
|
|
Output gap
|
-0.004
(-0.33)
|
-0.01
(-2.7)**
|
-0.03
(-1.68)*
|
-0.03
(-2.23)**
|
-0.21
(-3.65)***
|
-0.27
(-1.96)*
|
|
|
Lagged
endogenous
|
0.59
(5.08)***
|
0.34
(4.04)***
|
0.72
(9.04)***
|
0.74
(14.52)***
|
0.5
(4.45)***
|
0.23
(0.86)
|
|
|
R2
|
0.92
|
|
0.94
|
|
0.93
|
|
|
|
Individual
fixed effects
|
Yes
(0.0513)
|
|
Yes
(0.0484)
|
|
Yes
(0.0051)
|
|
|
|
Period fixed
effects
|
No
|
|
No
|
|
No
|
|
|
|
Hansen test
|
|
0.0921
|
|
0.0662
|
|
0.4226
|
|
|
A-B AR(2)
|
|
0.3618
|
|
0.5178
|
|
0.1556
|
|
|
Observations
|
64
|
46
|
64
|
58
|
64
|
46
|
|
|
Dependent
variable
|
Independent
variable of interest
|
Controls
|
Source
|
|
education
(ratio of education expenditures to total public expenditures)
health (same) and composition (ratio of education and health expenditures to
total public expenditures).
|
decentralization
(share of local to total exp)
|
Population
population density
age structure
gross domestic product (GDP) per capita
openness to international trade
OECD membership dummy
|
del Granado,
Martinez-Vazquez and McNab. (2018)
|
|
expenditure
share in total expenditures
|
corruption
convictions
|
log of state
population
the log of real state gross domestic product (GDP) per capita
the percentage of state population aged 25+ with at least a high school
diploma
the percentage of state population between ages 0-17
|
Cordis (2014)
|
|
expenditures
share of total expenditures
|
corruption
perception index
|
interest rate
on government bonds
the population density
the age-dependency ratio
the log of real GDP per capita
and the unemployment rate
regional dummies for the South, the Midwest, and the West
|
Hessami
(2014)
|
|
total
expenditure / COFOG category
|
real GDP in
national currency
election years
|
lagged
dependent
population
openness
the age structure (share of young and elderly in total population)
unemployment rate growth rate of total expenditures
|
Enkelmann and
Leibrecht (2013)
|
|
Expenditure
(share of GDP)
|
ln(population)
ln(GDP per capita)
openness
OECD membership
index of ethnic fractionalization
fraction of population over 65
|
|
Ferreiro,
Garcia-Del-Valle and Gomez (2009)
|
|
government
transfers to households
|
party linkage
|
lagged
dependent
age
unemployment
total expenditures
federalism dummy
district magnitude
|
Lago-Peñas and
Lago-Peñas (2009)
|
|
education
expenditures
|
corruption
index
|
|
Mauro (1998)
|
Source: Authors’ literature review.
|
Variable
|
Definition
|
Description
|
Source
|
|
PGGA
|
Public goods and
general administration
|
Aggregation of General public services,
Defence, Public order
and safety, and Environmental protection, measured in
GDP %
|
National Financial Institutions,
Eurostat
|
|
SE
|
Social expenditure
|
Aggregation of Housing and community
amenities, Health, Recreation,
culture and religion and Social protection,
measured in GDP %
|
National Financial Institutions,
Eurostat
|
|
PE
|
Productive expenditure
|
Aggregation of Economic affairs and
Education, measured in GDP %
|
National Financial Institutions,
Eurostat
|
|
ELECTIONS
|
Parliamentary elections
|
Dummy variable taking value of 1 for
parliamentary election year,
and 0 for other
|
National Election Commissions
|
|
PARTY_NAT
|
Party nationalization
index
|
The party nationalization index calculated
as per Bochsler (2010), where
politically decentralized countries are
described with a lower index value
|
National Election Commissions
|
|
CORRUPT
|
Corruption perception
index
|
The corruption perception index, where
less corrupt countries are
described by a higher index value
|
Transparency International
|
|
GDPEUR
|
Gross Domestic Product
|
Gross Domestic Product in millions of
euros, at current market prices
|
Eurostat
|
|
OPEN
|
Trade openness
|
Trade openness index, where higher values
are described for more
open economies
|
Eurostat
|
|
UNEM
|
Unemployment rate
|
Percentage of population aged over 15
years that is unemployed
|
International Labour Organization
|
|
TOTEXP
|
Total expenditures
|
Total expenditures, measured in GDP %
|
National Financial Institutions,
Eurostat
|
|
Variable
|
Mean
|
Median
|
Std. dev.
|
Maximum
|
Minimum
|
Observations
|
|
PGGA
|
10.71
|
9.94
|
2.97
|
19.35
|
6.8
|
70
|
|
PE
|
10.2
|
10.06
|
2.67
|
21.7
|
5.3
|
70
|
|
SE
|
22.94
|
23.38
|
3.14
|
29.1
|
17.8
|
70
|
|
ELECTIONS
|
0.27
|
0
|
0.45
|
1
|
0
|
70
|
|
PARTY_NAT
|
0.8
|
0.8
|
0.11
|
0.92
|
0.54
|
70
|
|
CORRUPT
|
4.55
|
4.2
|
0.94
|
6.7
|
3.2
|
70
|
|
GDPEUR
|
26,949.2
|
34,376.4
|
16,582.47
|
54,237.9
|
3,125.1
|
70
|
|
OPEN
|
1.07
|
1.03
|
0.23
|
1.61
|
0.66
|
70
|
|
UNEM
|
16.59
|
16.16
|
7.8
|
32.18
|
4.37
|
70
|
|
TOTEXP
|
43.85
|
44.91
|
5.28
|
60.3
|
33.1
|
70
|
|
SE
|
PE
|
|
C
|
12.8484
(2.1)**
[1.67]
|
-32.065
(-3.2)***
[-2.62]**
|
|
ELECTIONS
|
0.498
(2.25)**
[2.09]**
|
-0.3541
(-0.98)
[-0.83]
|
|
PARTY_NAT
|
16.8527
(3.49)***
[3.21]***
|
-4.8893
(-0.62)
[-0.56]
|
|
CORRUPT
|
-0.3769
(-1.2)
[-1.13]
|
0.2448
-0.48
[0.46]
|
|
GDPEUR
|
-0.0001
(-1.66)
[-1.88]*
|
0.0001
-0.92
[1.28]
|
|
OPEN
|
-0.8379
(-0.39)
[-0.38]
|
0.1487
-0.04
[0.05]
|
|
UNEM
|
-0.1432
(-3.05)***
[-3.17]***
|
0.2187
(2.84)***
[2.46]**
|
|
TOTEXP
|
0.0992
(2.09)**
[1.94]*
|
0.8844
(11.39)***
[10.77]***
|
|
Observations
|
70
|
70
|
|
Individual fixed effects
|
>0.0001
|
>0.0001
|
|
Period fixed effects
|
>0.0001
|
0.003
|
|
B-G test
|
0.66
|
0.16
|
|
R-squared
|
0.97
|
0.91
|
Figure 1Public expenditure as a share of GDP (%) DISPLAY Figure
Figure 2Expenditure categories as a share of total expenditures in 2019. Former Yugoslavian countries vs core EU countries (EU-15), % DISPLAY Figure
Figure 3Dendrogram of cluster analysis for 2011 DISPLAY Figure
Figure 4Dendrogram of cluster analysis for 2019 DISPLAY Figure
Table 1β-convergence in public expenditure DISPLAY Table
Table 2Estimate of equation 1 DISPLAY Table
Table 3 Specifications of models estimating determinants of expenditure functions DISPLAY Table
Table 4Variable description and data sources DISPLAY Table
Table 5Summary statistics DISPLAY Table
Table 6Determinants of COFOG expenditures DISPLAY Table
* The authors thank the D.1 unit-candidate and pre-candidate countries of DG ECFIN of the European Commission for its help in obtaining some of the data used in this research as well as the contributing institutions of the sample countries who participated in our data-collection process. The usual disclaimer applies. The authors are grateful to two anonymous referees who have contributed to the quality of the final version of the paper.
1 The Classification of the Functions of Government (COFOG) by the United Nations (  2000) is a current functional disaggregation of total general government expenditures into 10 categories.
2 The authors thank the D.1 unit-candidate and pre-candidate countries of DG ECFIN of the European Commission for its help in obtaining some of the data used in this research as well as the contributing institutions of the sample countries who participated in our data-collection process.
3 The EU-15 countries, also known as core EU countries, are: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and United Kingdom.
4 The category mainly includes labour, agriculture, forestry, fishing, fuel, energy, mining, manufacturing, construction, transport, communication, other industries, and R&D.
5 EU-13 is a group of 13 countries that have joined the EU since 2004: Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, and Slovenia.
6 The 10 expenditure categories as per COFOG are General Public Services; Defence; Public Order and Safety; Economic Affairs; Environmental Protection; Housing and Community Amenities; Health; Recreation, Culture and Religion; Education; and Social Protection.
7 In preliminary estimates, we also tried to use the maximum likelihood with structural equation modelling (ML SEM). This estimator is employed only with balanced panels where T is relatively small (e.g. less than 10) and there are no missing data (Allison, Williams and Moral-Benito, 2017; Moral-Benito, Allison and Williams, 2019 2019). It could be used to replace GMM with datasets where N is less than 100. However, issues were detected with this methodology due to the shortness of the sample.
8 In the preliminary testing phase, we conducted regressions using a variable for public goods and general administration (PGGA), that included the remaining COFOG categories of General public services, Defence, Public order and safety, and Environmental protection. Nevertheless, the determinants and controls showed not to be significant for this spending category that has a steady level over time in all countries. Therefore, we opted not to include it in the final results table.
9 We use data on parliamentary elections in former Yugoslavian republics from 2005 to 2018. The estimates are made using territory data from lower level units, such as municipalities instead of districts and/or cities. For example, the number of local units in the latest elections up to 2018 for each country was 144 for Bosnia and Herzegovina (2018), 560 for Croatia (2016), 88 for North Macedonia (2016), 24 for Montenegro (2016), 180 for Serbia (2016), and 88 for Slovenia (2018).
10 In order to ensure robustness of our results, SUR (Seemingly Unrelated Equations) estimates were also made. The results were similar.
|
|
June, 2023
II/2023
|
