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Crowding‐out and crowding‐in effects of the components of government expenditure

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  • H. Ahmed
  • SM. Miller

Abstract

This article examines the effects of disaggregated government expenditure on investment using fixed‐ and random‐effect methods. Using the government budget constraint, the analysis explores the effects of tax‐ and debt‐financed expenditure for the full sample, and for subsamples of developed and developing countries. In general, tax‐financed government expenditure crowds out more investment than debt‐financed expenditure. Expenditure on social security and welfare reduces investment in all samples while expenditure on transport and communication induces private investment in developing countries.

Suggested Citation

  • H. Ahmed & SM. Miller, 2000. "Crowding‐out and crowding‐in effects of the components of government expenditure," Contemporary Economic Policy, Western Economic Association International, vol. 18(1), pages 124-133, January.
    • Handle: RePEc:bla:coecpo:v:18:y:2000:i:1:p:124-133
    DOI: 10.1111/j.1465-7287.2000.tb00011.x
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    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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