Public expenditure simulations

Tags: international_projects, social_development, the_world_bank, projects_from_2011

Completion date: 19.09.2011

This study had a look at public expenditure reform options in Europe. It argued that countries in Europe face the need to reduce the size of government, and then simulated the impact of selected public expenditure reforms on the size of government. While fiscal consolidation can involve a mix of expenditure and revenue measures, the bulk of the adjustment is needed on the expenditure side in most countries in order to lower the size of government. The analysis prioritized reform needs and estimated potential fiscal savings in public expenditures, focusing in particular on social sectors and public wages. These sectors are critical, as they absorb a large part of government spending. The rise in the size of government in industrialized countries in the second half of the 20th century was mainly driven by higher spending on health care and pension spending. For the future, reforms to address long-run spending pressures in the social sectors are central in strengthening fiscal sustainability. Such measures have to be balanced with the objective of maintaining effective provision of public services to poor and vulnerable families, also because such reforms are more trwałe.

Project being done for: The World Bank

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