scholarly journals Can public spending boost private consumption?

2021 ◽  
Author(s):  
Stylianos Asimakopoulos ◽  
Marco Lorusso ◽  
Luca Pieroni
Keyword(s):  
Private Consumption ◽  
Public Spending

Does the crowding-in effect of public spending on private consumption undermine neoclassical models?

2017 ◽  
Vol 71 (3) ◽  
pp. 399-410 ◽  
Author(s):  
Steve Ambler ◽  
Hafedh Bouakez ◽  
Emanuela Cardia
Keyword(s):  
Private Consumption ◽  
Public Spending

Tunisian Fiscal Policy Effects in a New Keynesian Model With Price Rigidity and Monopolistic Competition

2021 ◽  
Vol 10 (1) ◽  
pp. 13-31
Author(s):  
Slah Slimani
Keyword(s):  
Fiscal Policy ◽  
Interest Rate ◽  
Private Consumption ◽  
Monopolistic Competition ◽  
Aggregate Demand ◽  
Public Spending ◽  
New Keynesian ◽  
Keynesian Model ◽  
The Business Cycle ◽  
The Interest Rate

This paper applies a multivariate neo-Keynesian DSGE model to study the effects of changes in Tunisian public spending on the business cycle, private consumption, wages, interest rate, and inflation rate in the presence of monopolistic competition and price nominal short-term rigidity. The main finding of this paper shows a Tunisian pro-cyclical fiscal policy. Expansionary public spending has two initial effects. The output increases due to the usual increase in labor supply, and aggregate demand increases due to an incomplete crowding out of private consumption. By increasing aggregate demand, the central bank increases the nominal interest rate, which moves in concert with inflation in order to counteract inflationary pressures. Households reduce their consumer spending at the same time as the real interest rate increases. Some companies are responding to the change in the interest rate by reducing their expenses, their employment demands, and their capital utilization rates.

scholarly journals Disentangling Civilian and Military Spending Shocks: A Bayesian DSGE Approach for the US Economy

2019 ◽  
Vol 12 (3) ◽  
pp. 141 ◽  
Author(s):  
Marco Lorusso ◽  
Luca Pieroni
Keyword(s):  
Private Consumption ◽  
Positive Impact ◽  
Public Spending ◽  
Robustness Analysis ◽  
Military Spending ◽  
Financial Liberalisation ◽  
Dynamic Stochastic ◽  
Spending Shocks ◽  
The Impact ◽  
The U.S

In this paper, we disentangle public spending components in order analyse their effects on the U.S. economy. Our Dynamic Stochastic General Equilibrium Model (DSGE) model includes both civilian and military expenditures. We take into account the changes in the effects of these public spending components before and after the structural break that occurred in the U.S. economy around 1980, namely financial liberalisation. Therefore, we estimate our model with Bayesian methods for two sample periods: 1954:3–1979:2 and 1983:1–2008:2. Our results suggest that total government spending has a positive effect on output, but it induces a fall in private consumption. Moreover, we find important differences between the effects of civilian and military spending. In the pre-1980 period, higher civilian spending induced a rise in private consumption, whereas military spending shocks systematically decreased it. Our findings indicate that civilian spending has a more positive impact on output than military expenditure. Our robustness analysis assesses the impact of public spending shocks under alternative monetary policy assumptions.

scholarly journals Implications for Public Policy

2021 ◽  
pp. 145-151
Author(s):  
Yew-Kwang Ng
Keyword(s):  
Public Policy ◽  
Environmental Protection ◽  
Old Age ◽  
Private Consumption ◽  
Public Spending ◽  
Big Society ◽  
Poverty Elimination ◽  
Imperfect Rationality ◽  
The Right ◽  
Environmental Disruption

AbstractThe failure of higher private consumption to increase happiness significantly due to environmental disruption, relative competition, adaptation, our materialistic bias, etc. are relevant for public policy, especially in making higher public spending in the right areas like environmental protection, research, poverty elimination, etc. more welfare-improving than a ‘big society, small government’. Some soft paternalistic measures such as nudging people to save adequately for old age may also be needed in the widespread presence of imperfect rationality and foresight.

scholarly journals A Case for Higher Public Spending

2021 ◽  
pp. 153-160
Author(s):  
Yew-Kwang Ng
Keyword(s):  
Private Consumption ◽  
Public Spending ◽  
Global Public Good ◽  
Excess Burden ◽  
Income Effects ◽  
Quality Of Life Indicators ◽  
Objective Quality ◽  
Good Nature

AbstractStudies by psychologists, sociologists, and economists indicate that increases in incomes beyond a moderate level are not related to happiness nor significantly with the objective quality-of-life indicators (which increase with scientific and technological breakthroughs at the global level). Yet everyone wants more money. This may be explained by environmental disruption, relative-income effects, inadequate recognition of adaptation effects, and the materialistic bias due to our accumulation instinct and advertising. These factors cause a bias towards private consumption, making public spending, especially on research and environmental protection (with their long-term and global public-good nature) well below optimal. This is made worse by economists’ emphasis on the excess burden of taxation, ignoring the negative excess burden on the spending side. As Kaplow argues, if taxes are raised in accordance to the benefits of the funded public goods at the respective income levels, no disincentive effects are involved.

scholarly journals Impact of Public Debt, Lending Interest Rate, Public Spending and Money Supply on Private Consumption in South Asian Countries: An Econometric Analysis

2020 ◽  
Vol 9 (4) ◽  
pp. 402-410
Author(s):  
MUHAMMAD REEHAN HAMEED ◽  
GHULAM SARWAR ◽  
MUHAMMAD ABDULLAH
Keyword(s):  
Interest Rate ◽  
Money Supply ◽  
South Asian ◽  
Public Debt ◽  
Private Consumption ◽  
Public Spending ◽  
Panel Cointegration ◽  
Wald Test ◽  
Least Square ◽  
Asian Countries

The public debt of South Asian countries has witnessed a continuous increase from the last three decades which has badly affected the household private consumption expenditures. High public debt can lead to steep losses for banks, both domestic and international, undermines the stability of financial systems in both the crisis-hit country and others. This can hit economic growth as well as private consumption. The purpose of this study is to examine the impact of public debt on private consumption in South Asian countries i.e. Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Besides public debt, the impact of some other important macroeconomic, fiscal, and monetary variables like lending interest rate, public spending and money supply have also been examined. For this purpose, 31 years of panel data from 1990 to 2020 of South Asian countries have been taken. The study has used a variety of econometric techniques like Robust Least Square Regression, Panel Cointegration, Error Correction Model (ECM), Wald test, and Panel Fully Modified Least Squares (FMOLS) approach to examine the short-run and long-run relationship among the variables. The results of Robust Least Square Regression indicate that public debt discourages private consumption. The lending interest rate also badly affected private consumption. The other variables like public spending and money supply have a favorable impact on private consumption. The results of the Kao Residual Panel Cointegration Test and the Johansen Fisher Panel Cointegration Test indicate that there exists a long run relationship among the variables. The results of the ECM and Wald Test reveal that a long run and short-run causality is running from independent variables to the dependent variable respectively. The study recommends that by using monetary and fiscal policies effectively the private consumption and economic growth can be stimulated in the economy. Keywords: South Asia, Public Debt, Private Consumption, Lending Interest Rate Public Spending, Money Supply, Robust Least Square Regression, ECM, FMOLS, Wald Test.

scholarly journals WELLBYs, cost-benefit analyses and the Easterlin Discount

2021 ◽  
Author(s):  
Paul Frijters
Keyword(s):  
Private Consumption ◽  
Cost Benefit Analysis ◽  
Public Spending ◽  
Cost Benefit ◽  
Hedonic Pricing ◽  
Reduction Factor ◽  
Benefit Analysis ◽  
Costs And Benefits ◽  
Producer Surplus ◽  
Consumption Benefits

The current practise of cost-benefit analysis inWestern countries consists of a collection of various incompatible ideas and methodologies to obtain replicable numbers for the costs and benefits of major public spending plans. This paper describes the main elements of the dominant methodology, which combines consumer and producer surplus, price-taking, government-inputs-as-outputs, hedonic pricing of externalities, and the issue-specific use of partial or general equilibrium thinking. The paper then discusses how that methodology can be augmented and partially replaced by looking at how prospective policies would change the total number of WELLBYs (life satisfaction-adjusted years of life) of the population. The ability of the WELLBY methodology to address complex externalities is illustrated by the Easterlin Discount, which is a proposed reduction factor of 75% on all estimates of private consumption benefits to offset the envy caused in others.

scholarly journals Can Public Spending Boost Private Consumption?

2016 ◽  
Author(s):  
Stylianos Asimakopoulos ◽  
Marco Lorusso ◽  
Luca Pieroni
Keyword(s):  
Private Consumption ◽  
Public Spending
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