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Title: |
An Empirical Analysis of the Effects of Government Spending on Capital
Investment: Evidence from O.E.C.D. Countries |
| Author: |
Giannaros, D.;
Kolluri, B.; Panik, M. |
| Author
Affiliation: |
U Hartford |
| Source: |
International Economic Journal, Spring 1999, v. 13, no. 1, pp. 45-55 |
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Publication Date: |
Spring 1999 |
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Abstract: |
This paper focuses on the possible
"direct" effect of increased government size on fixed capital formation.
That is, we hypothesize that as government increases its consumption as
a percentage of GDP, investors modify their investment plans
accordingly. It is our contention that the direct effects of government
size on fixed capital investment manifest themselves through a downward
shift in the investment schedule. To test this hypothesis, we estimate
an aggregate investment function for eighteen O.E.C.D. countries for the
period 1960-1994. Our findings suggest a negative relationship between
government size and fixed capital investment. |
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