Table 16.

The effect of fiscal consolidation on total expenditure for middle-income countries

	Dynamic Panel Estimation SGMM
	(1)	(2)	(3)	(4)	(5)	(6)
${\mathit{Texp}}_{it-1}$	0.592* (0.350)	0.599** (0.281)	0.736** (0.297)	0.997*** (0.090)	0.682** (0.318)	0.637*** (0.129)
${\mathit{fa}}_{\mathit{it}}$	−0.449*** (0.155)	−0.561** (0.210)	−0.689*** (0.097)	−0.738*** (0.166)	−0.664*** (0.119)	−0.694*** (0.193)
${\mathit{corrup}}_{\mathit{it}}$		−0.176 (0.219)	0.095 (1.556)	0.254 (1.103)	−1.095 (1.551)	−0.376 (0.297)
${\mathit{debt}}_{\mathit{it}}$			0.0* (0.023)	−0.054* (0.032)	−0.036 (0.031)	−0.066** (0.027)
${\mathit{gdpg}}_{\mathit{it}}$				−0.172** (0.064)	−0.328* (0.160)	−0.071** (0.033)
${\mathit{eldy}}_{\mathit{it}}$					0.169 (0.139)	−0.494*** (0.189)
${\mathit{young}}_{\mathit{it}}$						−0.554*** (0.195)
N	162	161	115	144	144	114
groups	18	18	23	18	18	23
N-instr	7	9	10	14	14	13
AR(1)	0.065	0.037	0.055	0.032	0.091	0.008
AR(2)	0.130	0.123	0.270	0.153	0.140	0.320
Hansen	0.303	0.529	0.650	0.144	0.996	0.368

Robust standard errors are in parentheses. Regressions are based on the Blundell-Bond estimator. Starting from the most parsimonious specification (column 1), we progressively introduce GDP growth, corruption, public debt, eldy and young population in columns (2)–(6). Significance level at which the null hypothesis is rejected: p < 0.1*; p < 0.05**; p < 0.01***