Fiscal heterogeneity and economic growth: Evidence from dynamic panel models and clustering in the European Union

This dataset contains cleaned and harmonized Eurostat data used to analyze the relationship between public spending composition, fiscal constraints, and economic growth across the 27 current EU member states over the period 1996–2023. Public spending composition plays a key role in shaping economic growth across EU member states. Health expenditure is associated with robust and state-dependent short-run growth effects. Education spending shows limited contemporaneous growth effects, suggesting longer-term transmission channels. Fiscal constraints and net lending conditions significantly influence the effectiveness of public expenditure. Strong cross-country heterogeneity in fiscal structures and growth dynamics characterizes the European Union.