Crowding-Out and Crowding-In Effects of the Components of Government Expenditure

Habib Ahmed () and Stephen M. Miller ()

No 1999-02, Working papers from University of Connecticut, Department of Economics

Abstract: We examine the effects of disaggregated government expenditure on investment using fixed- and random-effect methods. Using the government budget constraint, we explore the effects of tax- and debt-financed expenditure for the full sample, and for sub-samples of developed and developing countries. In general, tax-financed government expenditure crowds out more investment than debt-financed expenditure. Expenditure on social security and welfare reduces investment in all samples while expenditure on transport and communication induces private investment in developing countries.

Keywords: crowding out/crowding in. investment; government expenditure (search for similar items in EconPapers)
JEL-codes: E2 E6 O4 (search for similar items in EconPapers)
Date: 1999-07
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Published in Contemporary Economic Policy, January 2000

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Persistent link: http://EconPapers.repec.org/RePEc:uct:uconnp:1999-02

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