Table 2.

The effect of fiscal consolidation on total expenditure

	Dynamic Panel Estimation SGMM
	(1)	(2)	(3)	(4)	(5)	(6)
${\mathit{Texp}}_{it-1}$	0.613*** (0.201)	0.462*** (0.134)	0.479*** (0.181)	0.769*** (0.086)	0.701*** (0.107)	0.725*** (0.117)
${\mathit{fa}}_{\mathit{it}}$	−0.485*** (0.124)	−0.548*** (0.104)	−0.517*** (0.075)	−0.626*** (0.077)	−0.595*** (0.090)	−0.622*** (0.106)
${\mathit{gdpg}}_{\mathit{it}}$		−0.165** (0.076)	−0.149** (0.067)	−0.210*** (0.050)	−0.230*** (0.056)	−0.233*** (0.062)
${\mathit{corrp}}_{\mathit{it}}$			−0.695 (1.558)	−1.566* (0.927)	−2.656** (0.994)	−2.868*** (1.016)
${\mathit{debt}}_{\mathit{it}}$				0.016 (0.022)	−0.024 (0.028)	−0.025 (0.041)
${\mathit{eldy}}_{\mathit{it}}$					0.373** (0.161)	0.134 (0.314)
${\mathit{young}}_{\mathit{it}}$						−0.214 (0.269)
N	230	229	207	207	207	207
groups	23	23	23	23	23	23
N-instr	10	15	17	19	21	23
AR(1)	0.003	0.013	0.009	0.002	0.002	0.002
AR(2)	0.322	0.360	0.419	0.442	0.387	0.405
Hansen	0.764	0.737	0.606	0.111	0.232	0.393

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***