Economic Determinants of Government Subsidies

32 Pages Posted: 15 Feb 2006

See all articles by Benedict Clements

Benedict Clements

International Monetary Fund (IMF) - African Department

Hugo Rodríguez Mendizábal

Institut d'Anàlisi Econòmica (CSIC)

Gerd Schwartz

International Monetary Fund (IMF) - Fiscal Affairs Department

Date Written: December 1998

Abstract

The paper studies the economic determinants of government subsidies using panel data for 40 countries over 18 years (from 1975 to 1992) and finds that individual country-specific factors play a sizeable role in determining government subsidies. But it also suggests several characteristicsa small government, a small external current account deficit, and a productive structure geared more toward services and agriculture than manufacturingmay make it easier to keep subsidy expenditures down. The paper also suggests that globalization and the associated increase in openness are not impediments to reducing subsidies. In itself, an IMF-supported adjustment program is found not to be a significant determinant of government subsidy expenditures.

Keywords: government subsidies, government expenditures

JEL Classification: H2, H22

Suggested Citation

Clements, Benedict and Rodríguez Mendizábal, Hugo and Schwartz, Gerd, Economic Determinants of Government Subsidies (December 1998). IMF Working Paper No. 98/166, Available at SSRN: https://ssrn.com/abstract=883050

Benedict Clements (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

Hugo Rodríguez Mendizábal

Institut d'Anàlisi Econòmica (CSIC) ( email )

UAB Campus
E-08193 Bellaterra
Spain

HOME PAGE: http://rodriguez.iae-csic.org/

Gerd Schwartz

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

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