This paper examines the determinants of social spending in Latin
America during the period 1990–2012 and how they differed between the years of
the Washington Consensus (1990–2000) and the period that followed (2001–2012).
Special attention is also paid to the evaluation of convergence towards a common
upper-bounded steady state (absolute beta convergence) or to specific steady states
conditioned by their country’s specific determinants (conditional beta convergence).
We estimate a panel error-correction version of an autoregressive distributed lag
model to identify the long-term relationships between social expenditure and its
determinants. Generalised methods of moments estimators are used to control the
endogeneity of the regressors. Results indicate that Latin American social spending
follows a conditional beta convergence process over the Washington consensus
period that was mainly driven by structural differences in fiscal burdens and external
debt, while during the second period it was explained by conjunctural differences in
the fiscal burden, GDP per capita and the growth of trade and capital openness.

• Determinants of social spending in Latin America during and after the Washington consensus: a dynamic panel error-correction model analysis