Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5062560 | Economics Letters | 2007 | 6 Pages |
Abstract
This paper establishes a non-linear relationship between private consumption and government debt. In OECD-countries with high government debt, a fiscal expansion is partly crowded out by a fall in private consumption. In contrast, in low debt countries, private consumption is insensitive to changes in government debt. Thus fiscal policy is less effective in stabilising business cycle fluctuations at higher levels of government debt.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Robert-Paul Berben, Teunis Brosens,