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A panel cointegration approach to estimating substitution elasticities in consumption

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  • Auteri, Monica
  • Costantini, Mauro

Abstract

This paper investigates the relationship between government spending and private consumption. The general framework is a cointegration approach of Ogaki (1992) used to estimate the intratemporal elasticity of substitution between government and private consumption in a panel of 15 European countries. Recently developed non-stationary panel methodologies that assume cross-section dependence are applied. Results indicate an Edgeworth substitutability between private and public spending.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 27 (2010)
Issue (Month): 3 (May)
Pages: 782-787

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Handle: RePEc:eee:ecmode:v:27:y:2010:i:3:p:782-787

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Cointegration Government expenditure Intratemporal substitution Macroeconomic aspects of public finance Panel Unit root;

References

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  25. Leybourne, S J & McCabe, B P M, 1994. "A Consistent Test for a Unit Root," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(2), pages 157-66, April.
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  28. van Dalen, Hendrik P., 1999. "Intertemporal substitution in public and private consumption -- long-run evidence from the US and the UK," Economic Modelling, Elsevier, vol. 16(3), pages 355-370, August.
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Citations

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Cited by:
  1. Joan Esteban & Laura Mayoral, 2013. "A Politico-Economic Model of Public Expenditure and Income Taxation," Working Papers 743, Barcelona Graduate School of Economics.

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