Social Expenditures and Public Indebtedness in 15 EU Countries.
The ability of the Member States of the European Union to implement desired social policies is constrained by the parameters imposed by Economic and Monetary Union and the associated Stability and Growth Pact. The most important of these parameters have to do with public deficits and indebtedness. As social expenditure is the largest category of public expenditure, the effect that these parameters have on the amount of social expenditure and the way it is targeted is not without consequence.
In this study, we focus on the effect of public indebtedness on the targeting and use of public expenditure, and especially on changes in the ratio of social expenditure to general government total outlays. Most importantly, we seek to discover whether the resources released through lower debt payments are allocated to social security or to other public expenditure, and whether increasing public indebtedness leads to the crowding out of social expenditure by other outlays.
