Abstract
This paper investigates nonlinear effects of government debt on private consumption. The estimated consumption function shows smooth regime switching depending on the debt-to-GDP ratio, and a higher level of government debt crowds out private consumption to a greater extent.
Original language | English |
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Pages (from-to) | 504-507 |
Number of pages | 4 |
Journal | Economics Letters |
Volume | 121 |
Issue number | 3 |
DOIs | |
Publication status | Published - 2013 Dec |
Externally published | Yes |
Bibliographical note
Funding Information:This is a revised version of a KIEP Working Paper. The authors are grateful to Young-Joon Park and Ju Hyun Pyun for their helpful comments and suggestions. All remaining errors are the authors’ responsibility. Dooyeon Cho also acknowledges that this work was supported in part by the New Faculty Research Program 2013 of Kookmin University in Korea .
Copyright:
Copyright 2013 Elsevier B.V., All rights reserved.
Keywords
- Consumption
- Government debt
- Nonlinearity
- Panel smooth transition regression error correction model
ASJC Scopus subject areas
- Finance
- Economics and Econometrics