Nonlinear effects of government debt on private consumption: Evidence from OECD countries

Dooyeon Cho and Dong-Eun Rhee

Economics Letters, 2013, vol. 121, issue 3, 504-507

Abstract: This paper investigates nonlinear effects of government debt on private consumption. The estimated consumption function shows smooth regime switching depending on the debt-to-GDP ratio, and a higher level of government debt crowds out private consumption to a greater extent.

Keywords: Consumption; Government debt; Nonlinearity; Panel smooth transition regression error correction model (search for similar items in EconPapers)
JEL-codes: C23 E21 E62 H63 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:121:y:2013:i:3:p:504-507

DOI: 10.1016/j.econlet.2013.10.013

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