Consumption effects of government purchasesApostolos Serletis and Asghar Shahmoradi () Journal of Macroeconomics, 2010, vol. 32, issue 3, 892-905 Abstract: This paper takes a microeconomic- and aggregation-theoretic approach to the empirical analysis of the relationship between private and government consumption. It provides estimates of the Morishima elasticities of substitution based on an empirical comparison and evaluation of the effectiveness of a number of well-known flexible functional forms - the locally flexible generalized Leontief (see Diewert (1971)), translog (see Christensen et al. (1975)), and Almost Ideal Demand System (AIDS) (see Deaton and Muellbauer (1980)), and the semi-nonparametric globally flexible Fourier (see Gallant (1981)) and Asymptotically Ideal Model (AIM) (see Barnett et al. (1991)). In doing so, we pay explicit attention to the theoretical regularity conditions of positivity, monotonicity, and curvature, using recent advances in microeconometrics. Our results indicate that substitutability describes the relationship between government and private consumption, and hence concur with the consensus opinion that government purchases are substitutes for private consumption. Keywords: Fourier; flexible; functional; form; Asymptotically; ideal; model; Morishima; elasticity; of; substitution (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:32:y:2010:i:3:p:892-905 Access Statistics for this article Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos More articles in Journal of Macroeconomics from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.