Threshold effect of fiscal policy on private consumption: Evidence from Tunisia

Wissem Khanfir

Romanian Economic Journal, 2016, vol. 18, issue 59, 95-110

Abstract: Using a threshold regression model, we analyse the impact of fiscal policy on private consumption in Tunisia, over the 1975-2010 period. Our empirical results revealed that public expenditure and tax revenues have Keynesian effects on consumption, when private debt/GDP ratio is below 48 %. This effect becomes non-Keynesian once this threshold is exceeded. We provide empirical evidence that private consumption reacts in non-linear fashion to changes in fiscal policy.

Keywords: Fiscal Policy; Private consumption; Threshold regression model; Tunisia (search for similar items in EconPapers)
JEL-codes: C24 E21 E62 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:rej:journl:v:18:y:2016:i:59:p:95-110

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