Public debt and the effects of government expenditure on private consumption - A Kalman filter analysis of the Swedish experience 1970-1997
AbstractRecently, it has been suggested that the effect of government expenditure on private consumption is dependent on the level of public debt. More specifically, a higher public debt implies a less Keynesian response in private consumption. In this paper we investigate if this theory is supported by Swedish data 1970-1997 by estimating a consumption function allowing for time-varying parameters. Our main finding is that the effect of government expenditure has become less Keynesian over time. This coincides with a large increase in public debt, lending support to the theoretical predictions.
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Bibliographic InfoPaper provided by Lund University, Department of Economics in its series Working Papers with number 2003:3.
Length: 18 pages
Date of creation: 03 Apr 2003
Date of revision:
Contact details of provider:
Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
Phone: +46 +46 222 0000
Fax: +46 +46 2224613
Web page: http://www.nek.lu.se/
More information through EDIRC
Government expenditure; private consumption; time-varying parameters;
Find related papers by JEL classification:
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-04-09 (All new papers)
- NEP-EEC-2003-04-09 (European Economics)
- NEP-HIS-2003-04-09 (Business, Economic & Financial History)
- NEP-MAC-2003-04-09 (Macroeconomics)
- NEP-PUB-2003-04-09 (Public Finance)
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