Is private consumption growth higher (lower) during periods of fiscal contractions (expansions)?
(2002) In Journal of Macroeconomics 24(1). p.17-39- Abstract
- Case studies have claimed that private consumption growth is higher during fiscal contractions due to the very fact that government spending is cut. Indeed, neoclassical theory has this implication. This paper uses regression analysis of a panel of 19 OECD countries and shows that this is not true in general. On the contrary, contraction (expansion) periods experience lower (higher) private consumption growth which questions the generality of the findings in case studies. We find, instead, that preceding exchange rate movements have a significant effect on the private consumption response of fiscal contractions which highlights a rather different expectational channel. (C) 2002 Elsevier Science Inc. All rights reserved.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/892725
- author
- Hjelm, Göran LU
- organization
- publishing date
- 2002
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- panel data, private consumption, fiscal policy, fiscal contractions and expansions
- in
- Journal of Macroeconomics
- volume
- 24
- issue
- 1
- pages
- 17 - 39
- publisher
- Louisiana State University Press
- external identifiers
-
- wos:000177600800002
- scopus:0035997750
- ISSN
- 1873-152X
- DOI
- 10.1016/S0164-0704(02)00013-7
- language
- English
- LU publication?
- yes
- id
- 4cd7faf2-e309-494f-977a-c0323e5b8f51 (old id 892725)
- date added to LUP
- 2016-04-01 12:02:24
- date last changed
- 2022-02-03 08:41:41
@article{4cd7faf2-e309-494f-977a-c0323e5b8f51, abstract = {{Case studies have claimed that private consumption growth is higher during fiscal contractions due to the very fact that government spending is cut. Indeed, neoclassical theory has this implication. This paper uses regression analysis of a panel of 19 OECD countries and shows that this is not true in general. On the contrary, contraction (expansion) periods experience lower (higher) private consumption growth which questions the generality of the findings in case studies. We find, instead, that preceding exchange rate movements have a significant effect on the private consumption response of fiscal contractions which highlights a rather different expectational channel. (C) 2002 Elsevier Science Inc. All rights reserved.}}, author = {{Hjelm, Göran}}, issn = {{1873-152X}}, keywords = {{panel data; private consumption; fiscal policy; fiscal contractions and expansions}}, language = {{eng}}, number = {{1}}, pages = {{17--39}}, publisher = {{Louisiana State University Press}}, series = {{Journal of Macroeconomics}}, title = {{Is private consumption growth higher (lower) during periods of fiscal contractions (expansions)?}}, url = {{http://dx.doi.org/10.1016/S0164-0704(02)00013-7}}, doi = {{10.1016/S0164-0704(02)00013-7}}, volume = {{24}}, year = {{2002}}, }