An Empirical Analysis of The Effects of Government Spending on Capital Investment: Evidence from O.E.C.D. Countries
AbstractThis paper focuses on the possible “direct” effect in increased government size on fixed capital formation. That is, we hypothesize that as government increases its consumption as percentage of GDP, investors modify their investment plans accordingly. It is our contention that the direct effect of government size on fixed capital investment manifest themselves through a downward shift in the investment schedule. To test this hypothesis, we estimate an aggregate investment function for eighteen O.E.C.D. countries for the period 1960-1994. Our findings suggest a negative relationship between government size and fixed capital investment. [ E22, E62]
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal International Economic Journal.
Volume (Year): 13 (1999)
Issue (Month): 1 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RIEJ20
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barth, James R & Russek, Frank S & Wang, George H K, 1986. "A Time Series Analysis of the Relationship between the Capital Stock and Federal Debt: A Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(4), pages 527-38, November.
- Leonall C. Andersen & Jerry L. Jordon, 1968. "Monetary and fiscal actions: a test of their relative importance in economic stabilization," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 11-23.
- Barro, Robert J., 1981.
"Output Effects of Government Purchases,"
3451294, Harvard University Department of Economics.
- Kormendi, Roger C, 1983. "Government Debt, Government Spending, and Private Sector Behavior," American Economic Review, American Economic Association, vol. 73(5), pages 994-1010, December.
- Eisner, Robert & Pieper, Paul J, 1986. "A New View of the Federal Debt and Budget Deficits: Reply," American Economic Review, American Economic Association, vol. 76(5), pages 1156-57, December.
- Modigliani, Franco & Sterling, Arlie, 1986. "Government Debt, Government Spending and Private Sector Behavior: Comment," American Economic Review, American Economic Association, vol. 76(5), pages 1168-79, December.
- Jorgenson, Dale W, 1971. "Econometric Studies of Investment Behavior: A Survey," Journal of Economic Literature, American Economic Association, vol. 9(4), pages 1111-47, December.
- Kolluri, Bharat R. & Giannaros, Demetrios S., 1987. "Budget deficits and short-term real interest rate forecasting," Journal of Macroeconomics, Elsevier, vol. 9(1), pages 109-109.
- Feldstein, Martin, 1982.
"Government deficits and aggregate demand,"
Journal of Monetary Economics,
Elsevier, vol. 9(1), pages 1-20.
- Michael W. Keran, 1970. "Monetary and fiscal influences on economic activity : the foreign experience," Review, Federal Reserve Bank of St. Louis, issue Feb, pages 16-28.
- T.K. Jayaraman & Chee-Keong Choong, 2006. "Public Debt And Economic Growth In The South Pacific Islands: A Case Study Of Fiji," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 31(2), pages 107-121, December.
- Spector, Lee C, 1999.
"Macroeconomic Models and the Determination of Crowding Out,"
Public Finance = Finances publiques,
, vol. 54(1-2), pages 84-98.
- Lee C. Spector, 2005. "Macroeconomic Models and the Determination of Crowding Out," Working Papers 200511, Ball State University, Department of Economics, revised Mar 2006.
- Dearmon, Jacob & Grier, Robin, 2011. "Trust and the accumulation of physical and human capital," European Journal of Political Economy, Elsevier, vol. 27(3), pages 507-519, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.