6533b851fe1ef96bd12a8f48

RESEARCH PRODUCT

Discretionary Government Consumption, Private Domestic Demand, and Crisis Episodes

Ricardo M. SousaRicardo M. SousaDavide FurceriDavide FurceriLuca AgnelloLuca Agnello

subject

Consumption (economics)Economics and EconometricsGovernmentCrowding inCrowding-inShort runPrivate investmentControl (management)Social SciencesSettore SECS-P/02 Politica EconomicaTake overMonetary economicsPrivate consumptionCrowding outData_GENERALFiscal policy discretionCrowding-outEuropean integrationGDP growthEconomics

description

This paper analyzes the dynamic impact of discretionary government consumption purchases on private demand. Using a panel of 132 countries from 1960 to 2008, we find that while discretionary changes in government consumption lead to crowding-in effects in the short run, crowding-out effects take over in the medium run. In addition, we also find that both short-term crowding-in and mediumterm crowding out effects are amplified once we control for periods of crisis.

yearjournalcountryeditionlanguage
2012-09-23Open Economies Review
https://doi.org/10.1007/s11079-012-9256-2