Impact of Government Spending on Private Consumption Using ARDL Approach

Khan, Khalid; Fei, Chen; Kamal, Muhammad Abdul; Ashraf, Badar Nadeem

doi:10.18488/journal.aefr/2015.5.2/102.2.239.248

Cited by 10 publications

(6 citation statements)

References 25 publications

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“…Similar results have also been found in the study [32] in the case of China. The results of the study revealed that government spending have a positive impact on private consumption.…”

Section: -Discussionsupporting

confidence: 91%

The Complementary Effect between Private Consumption and Government Spending: Effect on the Economy

Kida

2021

Emerg Sci J

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This paper analyzes the relationship between final consumption and government spending, using the correlation and linear regression model. The objective of the research is whether government expenditures are complementary, substitute, or not related to private consumption to give positive effects on the economy. Methodology, quantitative secondary data were obtained from the World Bank, for five countries and processed with SPSS, 21. The empirical analysis was verified through, Bivariate and Partial correlation and normality test. The Result, first, shows that government spending complements and replaces final consumption. Second, it is also confirmed that even when interacting with other variables, the complementary effect of final consumption is not eliminated despite the shocks coming from government spending. Third, by adding other variables to the model, the issue of complementarity and substitutability of the two main variables is not lost. As a result, findings, confirm that private consumption (InCt) and government spending (InGt), Gross Savings (GS), and per capita income (GDPpc), are in statistically significant and positive relationships with each other. The novelty of the paper is, government expenditures cause an increase in private consumption is to high value, showing the complementary effect of government expenditures on private consumption. Based on health expenditures, education, public order, internet provided by the state have increased the demand of families for these services, causing an increase in the share of services provided by the private sector.JEL Classification: E21; H5; E2; R0. Doi: 10.28991/esj-2021-01292 Full Text: PDF

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“…Similar results have also been found in the study [32] in the case of China. The results of the study revealed that government spending have a positive impact on private consumption.…”

Section: -Discussionsupporting

confidence: 91%

The Complementary Effect between Private Consumption and Government Spending: Effect on the Economy

Kida

2021

Emerg Sci J

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“…The study done by Khan et al (2015) supported the existence of a direct relationship between the two types of spending in the Chinese case based on annual data from 1985 to 2013. The study used the ARDL approach.…”

Section: Theoretical Framework and Previous Studiesmentioning

confidence: 87%

“…In other words, government spending will crowd-out consumption spending. In another case, when the government turns to finance its spending through increasing note issues (deficit financing), inflation pressures resulting from that approach will negatively affect the consumption spending of individuals (Khan et al, 2015).…”

Section: Introductionmentioning

confidence: 99%

Is the Relationship Between Government Spending and Private Consumption in Egypt Symmetric?

Almosabbeh¹

2020

Margin: The Journal of Applied Economic Research

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The aim of this study, using Egyptian data from 1970 to 2016, is to explore the relationship between government spending and private consumption spending and to understand whether the relationship between the two is symmetric. The study uses the autoregressive distributed lag (ARDL) approach to explore a cointegration relationship between the two variables, and the nonlinear autoregressive distributed lag (NARDL) approach to test the hypothesis of a symmetric relationship between the two variables. By applying the ARDL approach, the study concludes that the effect of government spending on consumption spending is not significant in the long term. By applying the NARDL approach, the study concludes that: the hypothesis of the presence of a symmetric relationship is not accepted, there is a crowding-out relationship from the positive shocks of government spending and the substitutability coefficient between the two types of spending is 0.8699. JEL Classification: E12, E21, F62, H50

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“…Funashim and Ohtsuka (6) find that considering the spatial spillover effect and regional differences, government expenditures have a certain foundational effect on private consumption. Khan et al (24) revealed that government spending have positive impact on private consumption, and government spending has a positive impact on private consumption, and government spending is a very good instrument to boost the economy and encourage aggregate demand in China during a recession. Tenhofen et al (25) found that government spending and private consumption are positively related to some extent, and the expected expenditure impact has a significant impact on output when the impact is realized.…”

Section: Literature Reviewmentioning

confidence: 99%

Crowding-Out or Crowding-In: Government Health Investment and Household Consumption

Cheng

Zhi

Deng

et al. 2021

Front. Public Health

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This paper explores the relationship of government health investment and household consumption by applying a panel fixed effects model and Sobel-Goodman mediation tests to inland Chinese provinces. The empirical results highlight that government health investment has a crowding-in effect and can thus promote household consumption. Furthermore, the promotion effect on non-medical health consumption is greater than that on medical health consumption. The promotion effect of government health investment on rural household consumption is higher than that on urban household consumption, and the promotion effect on household consumption for northern provinces is higher than that in southern provinces. This heterogeneous effect is closely related to the difference between urban and rural development; and the economic levels of the northern and South regions. The mediation tests found that government health investment mainly promotes regional economic growth, and then increases household consumption. In the economic and social development process, the government should implement more effective medical and health care measures to increase social medical and health investment to improve the consumption level of households.

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Impact of Government Spending on Private Consumption Using ARDL Approach

Cited by 10 publications

References 25 publications

The Complementary Effect between Private Consumption and Government Spending: Effect on the Economy

The Complementary Effect between Private Consumption and Government Spending: Effect on the Economy

Is the Relationship Between Government Spending and Private Consumption in Egypt Symmetric?

Crowding-Out or Crowding-In: Government Health Investment and Household Consumption

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