Impact of Public Spending by Level of Government on Employment and Imports: Evidence from Argentina, 2004–2019.

This paper examines the effects of public spending on employment and import demand in Argentina from 2004 to 2019, focusing on differences across levels of government and spending composition. Drawing on a classical — Keynesian effective-demand framework and Latin American structuralist insights, it explores the trade-off between demand expansion and external constraints in a semi-industrialized economy. The empirical analysis combines an input — output framework with structural decomposition techniques to estimate the employment and import requirements associated with public spending by level of government, sector, and subperiod. The results show that public spending generates heterogeneous effects. National spending is associated with significantly higher import requirements, whereas subnational spending is more labor-intensive and less import-depending. These differences are driven not only by the volume of spending but by its sectoral composition. Over time, the effects of public spending also vary with the macroeconomic context: while the expansion phase (2005–2011) combined employment growth with rising imports, the subsequent period (2012–2019) shows weaker import responses under tighter external constraints. The findings highlight the importance of spending composition for balancing employment objectives and external sustainability.