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Discretionary Government Consumption, Private Domestic Demand, and Crisis Episodes

  • Luca Agnello
  • Davide Furceri

    ()

  • Ricardo Sousa

This paper analyzes the dynamic impact of discretionary government consumption purchases on private demand. Using a panel of 132 countries from 1960 to 2008, we find that while discretionary changes in government consumption lead to crowding-in effects in the short run, crowding-out effects take over in the medium run. In addition, we also find that both short-term crowding-in and medium-term crowding out effects are amplified once we control for periods of crisis. Copyright Springer Science+Business Media New York 2013

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File URL: http://hdl.handle.net/10.1007/s11079-012-9256-2
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Article provided by Springer in its journal Open Economies Review.

Volume (Year): 24 (2013)
Issue (Month): 1 (February)
Pages: 79-100

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Handle: RePEc:kap:openec:v:24:y:2013:i:1:p:79-100
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