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The Relationship between Government and Private Consumption: A Replication Study of Fiorito and Kollintzas (European Economic Review, 2004)

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  • Song, Zhongchen

Abstract

This paper replicates the article Fiorito and Kollintzas (2004) "Public goods, merit goods, and the relationship between private and government consumption". The authors investigated whether government consumption crowds out private consumption by splitting government consumption into two categories: Public goods and merit goods. The authors develop a model of household spending behaviour in the presence of government spending. They then estimate the model using difference GMM applied to 12 OECD countries between 1970 to 1996. This study re-estimated their main model specifications by attempting to re-construct their data. I also extended the data sample to a more recent period (1996 to 2015). My replication confirmed their finding that merit goods and private consumption are complements. On the other hand, I did not find support for their conclusion that public goods and private consumption are substitutes.

Suggested Citation

  • Song, Zhongchen, 2022. "The Relationship between Government and Private Consumption: A Replication Study of Fiorito and Kollintzas (European Economic Review, 2004)," Journal of Comments and Replications in Economics (JCRE), ZBW - Leibniz Information Centre for Economics, vol. 1, pages 1-24.
    • Handle: RePEc:zbw:jcreco:251601
    DOI: 10.18718/81781.23
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    References listed on IDEAS

    as
    1. Abel, Andrew B, 1990. "Asset Prices under Habit Formation and Catching Up with the Joneses," American Economic Review, American Economic Association, vol. 80(2), pages 38-42, May.
    2. John Y. Campbell & John Cochrane, 1999. "Force of Habit: A Consumption-Based Explanation of Aggregate Stock Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 205-251, April.
    3. Riccardo Fiorito & Flavio Padrini, 2001. "Distortionary Taxation and Labour Market Performance," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 173-196, May.
    4. Fiorito, Riccardo & Kollintzas, Tryphon, 2004. "Public goods, merit goods, and the relation between private and government consumption," European Economic Review, Elsevier, vol. 48(6), pages 1367-1398, December.
    5. repec:bla:obuest:v:63:y:2001:i:2:p:173-96 is not listed on IDEAS
    6. Dawood, Taufiq Carnegie & Francois, John Nana, 2018. "Substitution between private and government consumption in African economies," Economic Modelling, Elsevier, vol. 73(C), pages 129-139.
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    Cited by:

    1. Xing Xiong & Xinghou Yu & Yuxin Wang, 2022. "The impact of basic public services on residents’ consumption in China," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-8, December.

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    More about this item

    Keywords

    Crowding Out Effect; Consumption; Replication Study;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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