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Prosperity Or Stagnation: The Role Of Government Expenditures

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  • PAK HUNG MO

    (Department of Economics, School of Business, Hong Kong Baptist University, Kowloon Tong, Hong Kong)

Abstract

The focus of this paper is to examine the effects and mechanism of government expenditures (GEs) in determining the long-term inflation differentials across countries. For this purpose, we formulate a theoretical model and the related regression system. The models allow us to understand and quantify the supply-side (SS) and demand-side (DS) effects of GEs in determining prosperity or stagnation across countries. This study provides cross-country evidences and related mechanisms supporting the hypothesis and conclusion that active short-term AD policies and over-estimated potential output, as argued in Orphanides (2003), were contributive to the Great Inflation.

Suggested Citation

  • Pak Hung Mo, 2021. "Prosperity Or Stagnation: The Role Of Government Expenditures," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 66(05), pages 1153-1176, September.
    • Handle: RePEc:wsi:serxxx:v:66:y:2021:i:05:n:s0217590817500242
    DOI: 10.1142/S0217590817500242
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