The efficiency of government finanical expenditures before and during the COVID-19 pandemic: A cross-country investigation.

ABSTRACT

This paper examines the way government spending affected productivity and its decomposition before and during the COVID-19 outbreak. Using panel data from 158 economies, the research shows that spending on health care increases productivity, while spending on the military slows down productivity and its decompositions. These effects are even greater in the context of COVID-19, showing that spending on health care and avoiding conflict and military escalation will be important for future economies to grow in a sustainable way.