The cyclicality of consumption, wages and employment of the public sector in the euro area

$53.17 plus tax (Refund Policy)

Buy Article:

Abstract:

This study empirically examines the business cycle behaviour of public consumption and its main components, the public wage bill (including its breakdown into compensation per employee and public employment) and intermediate consumption, in the euro area aggregate, euro area countries and a group of selected non-euro area Organization for Economic Co-operation and Development (OECD) countries (Denmark, Sweden, the UK, Japan and the US). It looks across a large number of variables and methods, using annual data from 1960 to 2005. It finds robust evidence supporting that public consumption, wages and employment co-move with the business cycle in a pro-cyclical manner with 1–2 year lags, notably for the euro area aggregate and euro area countries. The findings reflect mainly the correlation between cyclical developments, but also point to an important role of pro-cyclical discretionary fiscal policies.

Keywords: E62; E63; H50; business cycle; detrending; public employment; public wages; stylized facts

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036846.2011.631895

Affiliations: 1: ECB, DG Research, Kaisseestarsse 29, Frankfurt am Main, D-60311, Germany 2: Bank of Spain, Madrid, Spain 3: ECB, DG-Economics, Frankfurt am Main, Germany

Publication date: April 1, 2013

More about this publication?
Related content

Share Content

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
X
Cookie Policy
ingentaconnect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more