DT 15/18 The behavior of social transfers over the business cycle: empirical evidence of Uruguay

This paper analyzes the cycle fluctuations of the social transfers in Uruguay over the period 1988.Q1 to 2016.Q3. The unobservable cyclical components are extracted from the observable time series following different empirical strategies. The results show that social transfers behave procyclical and lag the macroeconomics fluctuations. In this way, social transfers instead of contributing to stabilize the Uruguayan economy have aggravated the business cycle, and through various items of expenditure, expose the vulnerable groups of society to more adverse economic conditions.