Government debt, government spending, and private-sector behavior: comment
Article Abstract:
Roger C. Kormendi's 1983 article in American Economic Review calls for a consolidated approach to the examination of consumer behavior. His recommended method includes the implications of Ricardian equivalence and the possibility that government purchases of goods and services substitute for private consumption. However, the augmented equation nesting his consolidated approach is not general enough. The consolidated approach and a representative non-Ricardian approach are not well-supported when nested in a less restrictive specification.
Publication Name: American Economic Review
Subject: Economics
ISSN: 0002-8282
Year: 1995
User Contributions:
Comment about this article or add new information about this topic:
Fiscal policy and aggregate demand: comment
Article Abstract:
David Alan Aschauer, using a model of consumer behavior based on the permanent-income hypothesis in a 1985 paper, concluded that there was a significant amount of substitution between private consumption spending and government spending. However, John Y. Campbell and N. Gregory Mankiw, in a 1990 paper, reached a different conclusion. The validity of Aschauer's results was affected by the lack of use of disposable income in the model and by the utilization of an aggregate analysis of government spending.
Publication Name: American Economic Review
Subject: Economics
ISSN: 0002-8282
Year: 1993
User Contributions:
Comment about this article or add new information about this topic:
Fiscal policy and aggregate demand: reply
Article Abstract:
Fred C. Graham concludes that a 1985 study offers little support for the substitutability of private consumption and federal non-defense spending. However, Graham appears to have ignored the 1985 study's focus on the derivation of an evaluation of the Ricardian equivalence theorem using a Euler-equation framework. Graham's research does not prove that aggregate demand and private consumption increase as a result of tax reductions.
Publication Name: American Economic Review
Subject: Economics
ISSN: 0002-8282
Year: 1993
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Temporary and permanent government spending in a small open economy. Money, politics and the post-war business cycle
- Abstracts: The composition of government expenditure and its consequences for macroeconomic performance. Risk, the financial market, and macroeconomic equilibrium
- Abstracts: Inside debt, aggregate demand, and the Cambridge theory of distribution. The stock market and investment: another look at the micro-foundations of q theory
- Abstracts: Employment tenure and earnings profiles in Japan and the United States: comment. Employment tenure and earnings profiles in Japan and the United States: reply
- Abstracts: Environmental protection: the Omani legal regime. Workman's compensation and social security laws, miscellaneous legislation