Abstract

This study aims to examine the relationship between public financial management and indicators of well-being among 29 Economic Co-operation and Development (OECD) countries using a balanced panel dataset over the period between 2005 and 2019. This study used a matrix of seven proxy measures of public financial management, which works as an integrated financial system to improve the objective quality of well-being measured by employment, education level, productivity, and wages. Using the generalised method of moments, the estimator's results, indicate that higher government revenues, expenses (% of GDP) lead to lower well-being while the higher net lending /net borrowing, cost of business start-up procedures, and adjusted gross savings (% of GNI) lead to increase well-being measured by spending on education. The higher government revenues, regulatory quality, government effectiveness, and higher net lending /net borrowing lead to improved well-being, while the higher cost of business start-up procedures (% of GNI per capita) leads to lower well-being measured by wages. The higher government revenues, government effectiveness, and higher net lending/net borrowing lead to increased well-being. In contrast, the higher expense (% of GDP) leads to lower well-being measured by productivity labor. The higher government revenues, government effectiveness, regulatory quality, net lending /net borrowing and adjusted gross savings lead to lower well-being, while the higher cost of business start-up procedures leads to increased well-being measured by employment rates. The OECD countries should prepare fiscal policies to ensure the sustainability of public finances in the long run and identify emergency response mechanisms to overcome the challenges of improving the objective quality of well-being.