Abstract
We examine the effects of disaggregated government expenditure on investment using fixed- and random-effect methods. Using the government budget constraint, we explore the effects of tax- and debt-financed expenditure for the full sample, and for sub-samples 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.
Recommended Citation
Ahmed, Habib and Miller, Stephen M., "Crowding-Out and Crowding-In Effects of the Components of Government Expenditure" (1999). Economics Working Papers. 199902.
https://digitalcommons.lib.uconn.edu/econ_wpapers/199902