GLOBAL ECONOMIC CRISIS AND EFFECTIVENESS OF PUBLIC SPENDING: THE EU PRACTICE

Abstract

The financial crisis of 2008 affected the whole world and it had a negative impact on economies. The effects of the crisis are still experienced in several nations. Especially high budget deficits, public debt and unemployment problems caused a heated debate on public spending that was increased to prevent economic recession in the post-crisis era. This study aims to discuss public expenditure efficiency in the wake of global financial crisis. The study utilized a database including the indicators of; Public Expenditures (as a dependent variable), Gross Domestic Product (GDP), Gross Domestic Product Growth Rate, Unemployment Rate, Public Debt, Fiscal Deficit, Human Development Index (HDI). HDI. We used panel regression analysis for 28 EU countries, and time series analysis for the the top 10 countries in terms of per capita income for the period of 2000-2015. The following results were obtained: The high public spending did not affect the indicators used in this study in a positive way.