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 are those that
contribute more to provide smoothing. Moreover, the stabilization effects of social spending are
significantly larger in those countries where the size of social spending is higher. The empirical results are
economically and statistically significant and robust.
Stabilization Effects of Social Spending
Empirical Evidence from a Panel of OECD Countries Overcoming the Financial Crisis in the United States
Working paper
OECD Economics Department Working Papers
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