Private and Government Consumption in Transitional Economies: A Panel Data Analysis
26 Pages Posted: 1 Jun 2007
Date Written: December 2006
This paper investigates the presence of the relationship between private and government consumption through panel data techniques. Using a panel from different transitional countries, from 1990 to 2003, it applies the panel cointegration and causality methodologies. The study finds statistical evidence for a long run relationship between the variables under study. The empirical findings do not support the Ricardian Equivalence, since government consumption affects private consumption negatively in both methodological approaches.
Keywords: Private & government consumption, Ricardian Equivalence, Transitional Economies, Panel Data
JEL Classification: E21, H62, P20, C33
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