Estimating the Role of Government Expenditure in Long-run Consumption

David Aristei and Luca Pieroni

No 13/2005, Quaderni del Dipartimento di Economia, Finanza e Statistica from Università di Perugia, Dipartimento Economia

Abstract: In this paper we provide empirical evidence of the relationship between government purchases and private expenditure by adopting a microeconomic approach. Using UK quarterly data, a long-run demand system conditioned to the public sector is obtained by specifying a vector error correction model in which government consumption is assumed as an exogenous I(1) forcing variable. Our findings reject the hypothesis of separability of individual preferences between public and private expenditures, with simultaneous crowding out/in effects. Moreover, crowding out effects of government consumption on private spending are found to be larger for those goods and services that produce similar utility.

Keywords: Private and public expenditures; Crowding out; Conditional demand systems; Separability; Vector Error Correction Models. (search for similar items in EconPapers)
JEL-codes: D12 H31 H4 (search for similar items in EconPapers)
Date: 2005-06-14
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www2.ec.unipg.it/quaderni/quaderno_aristei_pieroni_13.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www2.ec.unipg.it:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

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:pia:wpaper:13/2005

Access Statistics for this paper

More papers in Quaderni del Dipartimento di Economia, Finanza e Statistica from Università di Perugia, Dipartimento Economia Contact information at EDIRC.
Bibliographic data for series maintained by Ubaldo Pizzoli ().