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A panel cointegration approach to estimating substitution elasticities in consumption

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  • Auteri, Monica
  • Costantini, Mauro

Abstract

This paper investigates the relationship between government spending and private consumption. The general framework is a cointegration approach of Ogaki (1992) used to estimate the intratemporal elasticity of substitution between government and private consumption in a panel of 15 European countries. Recently developed non-stationary panel methodologies that assume cross-section dependence are applied. Results indicate an Edgeworth substitutability between private and public spending.

Suggested Citation

  • Auteri, Monica & Costantini, Mauro, 2010. "A panel cointegration approach to estimating substitution elasticities in consumption," Economic Modelling, Elsevier, vol. 27(3), pages 782-787, May.
    • Handle: RePEc:eee:ecmode:v:27:y:2010:i:3:p:782-787
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