IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v30y2002i4p251-272.html
   My bibliography  Save this article

The Dependence of Private Consumer Demand on Public Consumption Expenditures: Theory and Evidence

Author

Listed:
  • George Tridimas

    (University of Ulster, gtridimas@talk21.com)

Abstract

Two different approaches are used to study how the structure of public consumption affects the allocation of consumer expenditure. The first assumes that public expenditures condition consumer preferences and introduces them as additional explanatory variables to the Linear Expenditure System by means of linear translating. Assuming that consumers are constrained in consuming publicly provided goods, the second uses the Almost Ideal Demand System to model preferences as nonseparable between privately and publicly provided goods. The resulting demand functions depend on total private expenditure, relative prices, and the quantities of public provision. Testing the predictions with U.K. data establishes the importance of public consumption expenditures in determining private consumer demand.

Suggested Citation

  • George Tridimas, 2002. "The Dependence of Private Consumer Demand on Public Consumption Expenditures: Theory and Evidence," Public Finance Review, , vol. 30(4), pages 251-272, July.
    • Handle: RePEc:sae:pubfin:v:30:y:2002:i:4:p:251-272
    DOI: 10.1177/109421030004001
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109421030004001
    Download Restriction: no
    File URL: https://libkey.io/10.1177/109421030004001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Davidson, Russell & MacKinnon, James G, 1981. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Econometrica, Econometric Society, vol. 49(3), pages 781-793, May.
    2. MacKinnon, James G. & White, Halbert & Davidson, Russell, 1983. "Tests for model specification in the presence of alternative hypotheses : Some further results," Journal of Econometrics, Elsevier, vol. 21(1), pages 53-70, January.
    3. Courakis, A S, 1974. "Clearing Bank Asset Choice Behaviour: A Mean Variance Treatment," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 36(3), pages 173-201, August.
    4. Pollak, Robert A & Wales, Terence J, 1981. "Demographic Variables in Demand Analysis," Econometrica, Econometric Society, vol. 49(6), pages 1533-1551, November.
    5. Neary, J. P. & Roberts, K. W. S., 1980. "The theory of household behaviour under rationing," European Economic Review, Elsevier, vol. 13(1), pages 25-42, January.
    6. Karras, Georgios, 1994. "Government Spending and Private Consumption: Some International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(1), pages 9-22, February.
    7. Blundell, Richard W & Walker, Ian, 1982. "Modelling the Joint Determination of Household Labour Supplies and Commodity Demands," Economic Journal, Royal Economic Society, vol. 92(366), pages 351-364, June.
    8. Blundell, Richard & Walker, Ian, 1984. "A Household Production Specification of Demographic Variables in Demand Analysis," Economic Journal, Royal Economic Society, vol. 94(376a), pages 59-68, Supplemen.
    9. Aschauer, David Alan, 1985. "Fiscal Policy and Aggregate Demand," American Economic Review, American Economic Association, vol. 75(1), pages 117-127, March.
    10. Robert A. Pollak, 1969. "Conditional Demand Functions and Consumption Theory," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 83(1), pages 60-78.
    11. Brown, Alan & Deaton, Angus S, 1972. "Surveys in Applied Economics: Models of Consumer Behaviour," Economic Journal, Royal Economic Society, vol. 82(328), pages 1145-1236, December.
    12. Deaton, Angus & Meullbauer, John, 1981. "Functional Forms for Labor Supply and Commodity Demands with and without Quantity Restrictions," Econometrica, Econometric Society, vol. 49(6), pages 1521-1532, November.
    13. Tridimas, George, 2001. "The Economics and Politics of the Structure of Public Expenditure," Public Choice, Springer, vol. 106(3-4), pages 299-316, March.
    14. Katsaitis, O. & Angastiniotis, M., 1990. "On the impact of government spending on consumption patterns : Some exploratory results," Economics Letters, Elsevier, vol. 33(3), pages 271-275, July.
    15. Anderson, Gordon & Blundell, Richard, 1984. "Consumer Non-Durables in the U.K. A Dynamic Demand System," Economic Journal, Royal Economic Society, vol. 94(376a), pages 35-44, Supplemen.
    16. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Aristei & Luca Pieroni, 2005. "Estimating the Role of Government Expenditure in Long-run Consumption," Quaderni del Dipartimento di Economia, Finanza e Statistica 13/2005, Università di Perugia, Dipartimento Economia.
    2. Luca Pieroni, 2007. "How Strong is the Relationship between Defence Expenditure and Private Consumption? Evidence from the United States," Working Papers 0705, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    3. Pieroni, Luca, 2009. "Does defence expenditure affect private consumption? Evidence from the United States," Economic Modelling, Elsevier, vol. 26(6), pages 1300-1309, November.
    4. Kan, Kamhon & Fu, Tsu-Tan, 1997. "Analysis of Housewives' Grocery Shopping Behavior in Taiwan: An Application of the Poisson Switching Regression," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(2), pages 397-407, December.
    5. Pierre-André Chiappori, 1990. "La théorie du consommateur est-elle réfutable ?," Revue Économique, Programme National Persée, vol. 41(6), pages 1001-1026.
    6. Tarek Atalla & Simona Bigerna & Carlo Andrea Bollino, 2018. "Energy demand elasticities and weather worldwide," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(1), pages 207-237, April.
    7. Chen, Dabai, 1990. "Plan and market(s): a theoretical model of the Chinese grain economy," ISU General Staff Papers 1990010108000010424, Iowa State University, Department of Economics.
    8. D. Aristei & Luca Pieroni, 2008. "Cointegration Rank Test and Long Run Specification: A Note on the Robustness of Structural Demand Systems," Working Papers 0809, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    9. Inmaculada Garcia & Jose Alberto Molina, 1998. "Household labour supply with rationing in Spain," Applied Economics, Taylor & Francis Journals, vol. 30(12), pages 1557-1570.
    10. Vittorio Nicolardi, 2009. "The effects of the new 1995 ESA methodologies of estimation on the structural analysis of Italian consumption," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 18(1), pages 125-149, March.
    11. Brannlund, Runar & Nordstrom, Jonas, 2004. "Carbon tax simulations using a household demand model," European Economic Review, Elsevier, vol. 48(1), pages 211-233, February.
    12. Lee, Lung-Fei & Pitt, Mark M., 1984. "Microeconometric Models of Consumer and Producer Demand with Limited Dependent Variables," Bulletins 7495, University of Minnesota, Economic Development Center.
    13. Laura Blow, 2003. "Demographics in demand systems," IFS Working Papers W03/18, Institute for Fiscal Studies.
    14. Huffman, Sonya Kostova, 1999. "Changes of household consumption behavior during the transition from centrally-planned to market-oriented economy," ISU General Staff Papers 1999010108000013568, Iowa State University, Department of Economics.
    15. Tridimas, George, 2000. "The analysis of consumer demand in Greece. Model selection and dynamic specification," Economic Modelling, Elsevier, vol. 17(4), pages 455-471, December.
    16. LaFrance, Jeffrey T., 2008. "The structure of US food demand," Journal of Econometrics, Elsevier, vol. 147(2), pages 336-349, December.
    17. Nachiketa Chattopadhyay & Amita Majumder & Dipankor Coondoo, 2009. "Demand Threshold, Zero Expenditure And Hierarchical Model Of Consumer Demand," Metroeconomica, Wiley Blackwell, vol. 60(1), pages 91-118, February.
    18. Mauricio V.L. Bittencourt & Ratapol P. Teratanavat & Wen S. Chern, 2007. "Food consumption and demographics in Japan: Implications for an aging population," Agribusiness, John Wiley & Sons, Ltd., vol. 23(4), pages 529-551.
    19. Beggs, John J, 1988. "Diagnostic Testing in Applied Econometrics," The Economic Record, The Economic Society of Australia, vol. 64(185), pages 81-101, June.
    20. Bittencourt, Maurício Vaz Lobo & Teratanavat, Ratapol P. & Chern, Wen S., 2004. "Examining Food Consumption In Japan Under Life-Cycle Hypothesis: Implication From Cross-Sectional Data," 2004 Annual meeting, August 1-4, Denver, CO 20070, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:30:y:2002:i:4:p:251-272. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.