Nonlinear effects of government debt on private consumption: Evidence from OECD countries

Dooyeon Cho, Dong Eun Rhee

Research output: Contribution to journalArticlepeer-review

10 Citations (Scopus)

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 languageEnglish
Pages (from-to)504-507
Number of pages4
JournalEconomics Letters
Volume121
Issue number3
DOIs
Publication statusPublished - 2013 Dec
Externally publishedYes

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

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