The government spending and private consumption: a panel cointegration analysis

According to Bohn (1995), conventional econometric analysis of sustainability, based on unit root tests on the government debt-to-GDP series or cointegration analysis between revenues and expenses, are inconclusive to verify the sustainability of the fiscal policy. This paper uses the multicointegration method to investigatethe validity of a long-term relationship between the Brazilian government`s accumulated revenues and expenses and its debt, all expressed as a proportion of GDP. Leachman et al. (2005) argue that this technique allows concluding about the sustainability or not of fi scal policy. The present work considers specificationsthat allow evaluating the reaction of both accumulated revenues and expenses to changes in the debt-to-GDP, using monthly data from December 1997 to June 2018. We conclude that the Brazilian fiscal policy was unsustainable over the study period, due to the excessive government spending and its growing trajectory, mainly at the end of the sample.

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Fiscal Policy Shocks and Private Consumption in Nigeria: Blanchard-Perotti (2002) Approach

Journal of Economics and Behavioral Studies ◽

10.22610/jebs.v7i6(j).617 ◽

2015 ◽

Vol 7 (6(J)) ◽

pp. 42-60

Author(s):

OSENI Isiaq Olasunkanmi

Keyword(s):

Fiscal Policy ◽

Government Spending ◽

Private Consumption ◽

Government Expenditure ◽

Structural Var ◽

Long Run ◽

Short Period ◽

Policy Shocks ◽

Negative Effect ◽

The Government

This paper examines the effects of fiscal policy shocks on private consumption in Nigeria. Albeit, there is a considerable number of works examining the effects of fiscal policy shocks on private consumption globally but in Nigeria, no study has used the structural VAR approach by Blanchard and Perotti (2002) as used in this paper. This approach relies on institutional information about the tax and transfer systems and the timing of tax collection to identify the automatic response of taxes and spending to private consumption as well as to infer fiscal shocks. The key result of this paper is that positive government spending shocks in Nigeria have an instantaneous negative effect on private consumption. The effect becomes significant in the period following the shock. Also, positive tax shocks have a negative effect on private consumption in the period of a shock and the effect becomes statistically insignificant afterwards. On this premises, one-off changes in government spending and taxes in Nigeria are long-lived and short-lived respectively. Thus, the government expenditure changes can be used to support private consumption in the long-run while that of taxes can only be used to support private consumption for a short period.

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A Pitfall with Estimated DSGE-Based Government Spending Multipliers

American Economic Journal Macroeconomics ◽

10.1257/mac.5.4.141 ◽

2013 ◽

Vol 5 (4) ◽

pp. 141-178 ◽

Cited By ~ 9

Author(s):

Patrick Fève ◽

Julien Matheron ◽

Jean-Guillaume Sahuc

Keyword(s):

Government Policy ◽

Government Spending ◽

Private Consumption ◽

Government Expenditures ◽

Long Run ◽

The Government ◽

Endogenous Component

This paper examines issues related to the estimation of the government spending multiplier (GSM) in a DSGE context. We stress a source of bias in the GSM arising from the combination of endogenous government expenditures and Edgeworth complementarity between private consumption and government expenditures. Due to cross-equation restrictions, omitting the endogenous component of government policy at the estimation stage would lead an econometrician to underestimate the degree of Edgeworth complementarity and, consequently, the long-run GSM. An estimated version of our model with US postwar data shows that this bias matters quantitatively. The results are robust to a number of perturbations. (JEL E13, E23, E32, E62, H50)

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Export-led Growth Hypothesis in MINT Countries: A Panel Cointegration Analysis

International Conference on Eurasian Economies 2017 ◽

10.36880/c09.01989 ◽

2017 ◽

Author(s):

Harun Bal ◽

Shahanara Basher ◽

Abdulla Hil Mamun ◽

Emrah Akça

Keyword(s):

Economic Growth ◽

Large Population ◽

Panel Cointegration ◽

Secondary Data ◽

Capital Formation ◽

Cointegration Analysis ◽

Promotion Strategy ◽

Key Factor ◽

Good Number ◽

Growth Hypothesis

The contribution of exports to GDP in MINT countries that improve substantially just after their implantation of export promotion strategy in the late 1980s raises the issue of whether the growth in these countries is led by export or not. While a good number of studies have been found investigating whether economic growth is promoted by exports for developing countries having an outstanding share of export in GDP, no study investigating the export-led growth hypothesis for MINT countries has been found until recent times. The main purpose of this study is to fill up the void. The study employs panel cointegration technique with an aim to examine whether the export is the key factor of economic growth for MINT countries employing yearly secondary data that covers the period. Results of the study imply that economic growth of these countries is considerably exports driven. Moreover, there is an indication of improvement of efficiency as exports work along with the rise capital formation. As the employment opportunity of an economy is expanded through capital formation, the emerging MINT countries endowed with large population and favorable demographics are expected to become the major exporters with strong GDP growth by being able to attract adequate foreign investment.

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