Liquidity Constraints and the Substitutability between Private and Government Consumption: The Role of Military and Non-military Spending

Paul Evans and Georgios Karras

Economic Inquiry, 1998, vol. 36, issue 2, 203-14

Abstract: Using data from sixty-six economies, the authors examine (1) the substitutability between private consumption and military and nonmilitary government spending and (2) the severity of liquidity constraints. Although the estimated substitutability parameters are fragile, private consumption and nonmilitary government spending are shown to be generally substitutes, whereas private consumption and military spending are better described as complements. The fraction of income that accrues to liquidity constrained households is typically positive and the severity of liquidity constraints, which is robust and precisely estimated, is shown to be negatively related to saving rates and positively related to the variability of transitory income. Copyright 1998 by Oxford University Press.

Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (23)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:ecinqu:v:36:y:1998:i:2:p:203-14

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Economic Inquiry is currently edited by Preston McAfee

More articles in Economic Inquiry from Western Economic Association International Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().