Crowding-Out and Crowding-In Effects of the Components of Government Expenditure
AbstractWe examine the effects of disaggregated government expenditure on investment using fixed- and random-effect methods. Using the government budget constraint, we explore the effects of tax- and debt-financed expenditure for the full sample, and for sub-samples of developed and developing countries. In general, tax-financed government expenditure crowds out more investment than debt-financed expenditure. Expenditure on social security and welfare reduces investment in all samples while expenditure on transport and communication induces private investment in developing countries.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 1999-02.
Length: 18 pages
Date of creation: Jul 1999
Date of revision:
Publication status: Published in Contemporary Economic Policy, January 2000
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More information through EDIRC
crowding out/crowding in. investment; government expenditure;
Find related papers by JEL classification:
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
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