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Title: |
Fiscal Policy and the Composition of Private Consumption: Some Evidence
from the U.S. and Canada |
| Author: |
Malley, Jim;
Molana, Hassan |
| Author
Affiliation: |
U Glasgow; U
Dundee |
| Source: |
International Economic Journal, Spring 2002, v. 16, no. 1, pp. 139-158 |
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Publication Date: |
Spring 2002 |
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Abstract: |
This paper develops a generalised version
of the life-cycle model in which consumers' preferences are defined over
components of consumption and are affected by the level of public
expenditure on goods and services. The model implies that the crowding
out of private consumption could in fact be a direct demand side
phenomenon caused by the way preferences respond to a change in public
spending. Evidence from U.S. and Canadian data for the period 1935-95
confirms this theoretical conjecture as well as implying that in both
countries demand for durable goods is likely to show relatively large
swings which may undermine the stability of the sector and harm the
supply side. |
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