Public expenditures in crisis periods: empirical testing of developed countries and Ukraine

Abstract

Introduction. It is important for the development of the country to improve the planning and increase the efficiency of public expenditures, the search for their optimal structure, but such tasks become much more difficult in conditions of uncertainty and are actualized during economic crises. The purpose is to identify the features and trends of the impact of public expenditures on economic growth in crisis periods in Ukraine and in the developed countries. Methods. A systematic methodical approach was used in combination with the methods of statistical research. Results. The study has tested the following hypotheses: according to Wagner's law, it is assumed that the growth of public expenditures should be accompanied by the GDP growth ; socio-economic development of the country is determined not only by volumes, but also by the efficiency of the use of state financial resources (according to Keynes' hypothesis); the level of GDP redistribution through state budget is sensitive to crises; local budgets are less sensitive to financial and economic crises Conclusions. It has been proven that public expenditures increase aggregate demand and stimulates economic growth. However, different directions of expenditures for current or investment purposes, as well as their sectoral cut, have an unequal impact on economic growth. Despite the understanding of higher efficiency to ensure economic growth of investment-oriented expenditures, the budgetary policy of developed countries is aimed at the primary observance of social standards and efforts to combine economic growth with social justice. The level of centralization of GDP in the consolidated budget of countries is sensitive to crises, which is manifested by the increase in expenses during the crisis period. Crisis phenomena also have an impact on the change in the structure of budget expenditures, which was reflected in the increase in the share of health care expenditures during the spread of the COVID-19 pandemic and defense expenditures during martial law. At the same time, local budget expenditures are less sensitive to crises. In the conditions of external threats, and especially the involvement of the country in a military conflict, the role of the state is growing, as evidenced by the drastic changes in the structure of the state budget of Ukraine during the war, as well as the growth of military expenditures in the EU, the USA and other countries.