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Does government spending crowd out private consumption in Malaysia
Nor Asmat Ismail
Jurnal Kemanusiaan , 2010,
Abstract: This paper investigates the relationship between government spending and private consumption in Malaysia. The empirical results show that: first, in Malaysia, government spending and private consumption are best described as complementary rather than as substitutes. So, this paper rejects the arguments that there is a significant degree of substitutability between government spending and private consumption. Private consumption cannot be held responsible for any crowding-out effects that government spending might have on aggregate demand. Second, in Malaysia, the tax variable is significantly different from zero. So, the rejection of Ricardian equivalence is confirmed statistically. Therefore, demand management policies, especially expansionary fiscal policy should be continued to foster economic growth.
The link between government spending, consumer confidence and consumption expenditures in emerging market countries
?zerkek Yasemin,?elik Sadullah
Panoeconomicus , 2010, DOI: 10.2298/pan1004471o
Abstract: The impact of government spending on private consumption is extensively studied in the literature. However, the main theme of these studies is the possible crowding-in or crowding-out impact of government spending on consumer spending. This paper attempts to introduce a new variable to this well-known literature by investigating the existence of a relationship between government expenditure, consumer spending and consumer confidence for a group of emerging market countries. We examine whether a change in consumer confidence causes any change in government spending. Moreover, we analyze whether there is a feedback from government spending and private consumption to consumer confidence. Our empirical findings demonstrate the important role of consumer confidence on government spending and private consumption expenditures.
A Comprehensive Analysis of the Response of Private Consumption to Government Spending  [PDF]
Yoshito Funashima
Theoretical Economics Letters (TEL) , 2017, DOI: 10.4236/tel.2017.77133
Abstract: This paper considers a simple model in which government spending is productive and has a complementary relationship with private consumption to study the response of the latter to government spending. We discuss how these two characteristics can yield empirical observations that indicate a positive response of private consumption to government spending. By assuming some plausible parameter settings, we demonstrate that these dual aspects of government spending, which are normally treated separately in the literature, are inseparably linked. Our findings reveal that in addition to the presence of complementarity, productivity—even if minimal—increases the likelihood of generating a positive consumption response.
The effect of fiscal policy in terms of government spending on private consumption in recessions and booms in Iran
Neda Kassaipour,Mehdi Taghavi,Maryam Ghadimi
Management Science Letters , 2012,
Abstract: This paper presents an empirical study on measuring the effects of fiscal policy in terms of government spending on private consumption in both recession and booms over the period of 1965-2010. The proposed study uses Hodric-Prescott filter to find the cycle of recessions and booms. Then, we use autoregressive distributed lag model to estimate the changes. The results of this survey indicate that, in long term, an increase on government expenditures normally impacts private sector positively in both recessions and booms. The impact in short terms is positive during the recessions but during the booming session, there is no meaningful relationship between government spending and private spending.
Determinants of Foreign Direct Investment Inflows to ECOWAS Member Countries: Panel Data Modelling and Estimation  [PDF]
Malick Sane
Modern Economy (ME) , 2016, DOI: 10.4236/me.2016.712137
Abstract: This article aims to investigate the explanatory factors of FDI attractiveness in the Economic Community of West African States (ECOWAS) through panel data modelling and estimation over the period 1985-2015. The findings show that stabilization of the macroeconomic environment, government consumption expenditures, domestic credit to the private sector, interest rate, gross fixed capital formation, exchange rate, economic freedom index, as well as natural resources and market size are the main FDI driving factors in ECOWAS.
Productive Government Spending, Welfare and Exchange Rate Dynamics  [PDF]
Juha Tervala
Financial Theory and Practice , 2008,
Abstract: This study analyses the consequences of productive government spending on the international transmission of fiscal policy. A standard result in the new open economy macroeconomics literature is that a fiscal shock depreciates the exchange rate. I demonstrate that the response of the exchange rate depends on the productivity of government spending. If productivity is sufficiently high, a fiscal shock appreciates the exchange rate. It is also shown that the introduction of productive government spending increases both domestic and foreign welfare, when compared with the case where government spending is wasted. This is because productive government spending has a positive effect on private consumption in both countries in a two country NOEM model.
On the multiplicative effect of government spending (or any other spending for that matter)  [PDF]
Jo?o P. da Cruz
Quantitative Finance , 2015,
Abstract: There is, among the economist ecosystem, the idea of virtuous public spending as a form of promotion of economic growth. If we think on the way GDP is measured, it is not possible to get that conclusion because it becomes circular: measuring the money flow obviously will detect directly the public spending but always mixed with the flow of money from other sources. The question is how virtuous is public spending per se? Can it promote economic growth? Is there multiplicative effect in GDP bigger than 1? In this paper, we make use of the first principles of Economics to show that government spending is, at the most, as virtuous as private consumption and can be a source of economic depression and inequality if it is not restricted to fundamental services.
Public Spending and Growth in the Countries of the Economic Community of West African States  [PDF]
Amath Ndiaye
Modern Economy (ME) , 2018, DOI: 10.4236/me.2018.911122
Abstract: Our research focuses on the impact of government spending on economic growth in the countries of the Economic Community of West African States (ECOWAS). It draws on new theories of endogenous growth, and more specifically on Rajhi model. After the tests of specification, an ARDL model was estimated for each of the countries which have cointegration relationships. For those whose cointegration relationship does not exist, a VAR estimate was made. So according to estimates, Total Public Spending in most of the countries of ECOWAS has not positive influence on the economic growth as well in the short term as in the long term. Also in most of the countries, Public Consumption did not positively affect economic growth as well in the long run as in the short run. Regarding Public Investment, we have the same results; it does not positively affects economic growth in most of the ECOWAS countries. Burkina Faso, Guinea and Ivory Coast are the three excepted countries where Total Public Spending has a positive effect on GDP growth in the long term but not in the short run. For further analysis we looked at Public Consumption and Public Investment. It is only in four out of ten countries of the sample that, we found that Public Consumption expenditures positively affect economic growth in the short term while the impact generally is negative in the long term. Regarding Public investment, it is only in three out of ten countries (Burkina Faso, Cote d’Ivoire, Ghana), that it was found determinant to economic growth in the long term.
Government Expenditure and Economic Growth in Five ECOWAS Countries: A Panel Econometric Estimation
E.F. Oteng-Abayie
Journal of Economics Theory , 2012, DOI: 10.3923/jeth.2011.11.14
Abstract: The study explores the cointegration relationship between government expenditure and economic growth for five ECOWAS countries. A panel cointegration approach is used for the dataset for the first time. From the results, government expenditure and economic growth are not cointegrated in both their common and idiosyncratic components. Thus, further analysis on the causalities among the variables could not be assessed. The results collaborate recent findings on the weakness in using fiscal policy to explain economic growth behaviour in these developing and resource constrained countries.
Public preferences for government spending in Canada  [cached]
Ramji Sabrina,Qui?onez Carlos
International Journal for Equity in Health , 2012, DOI: 10.1186/1475-9276-11-64
Abstract: This study considers three questions: 1. What are the Canadian public’s prioritization preferences for new government spending on a range of public health-related goods outside the scope of the country’s national system of health insurance? 2. How homogenous or heterogeneous is the Canadian public in terms of these preferences? 3. What factors are predictive of the Canadian public’s preferences for new government spending? Data were collected in 2008 from a national random sample of Canadian adults through a telephone interview survey (n =1,005). Respondents were asked to rank five spending priorities in terms of their preference for new government spending. Bivariate and multivariable logistic regression analyses were conducted. As a first priority, Canadian adults prefer spending on child care (26.2%), followed by pharmacare (23.1%), dental care (20.8%), home care (17.2%), and vision care (12.7%). Sociodemographic characteristics predict spending preferences, based on the social position and needs of respondents. Policy leaders need to give fair consideration to public preferences in priority setting approaches in order to ensure that public health-related goods are distributed in a manner that best suits population needs.
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