Nonlinear effects of government debt on private consumption: Evidence from OECD countries

Dooyeon Cho, Dong-Eun Rhee

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

This paper investigates nonlinear effects of government debt on private consumption. The estimated consumption function shows smooth regime switching depending on the debt-to-GDP ratio, and a higher level of government debt crowds out private consumption to a greater extent.

Original languageEnglish
Pages (from-to)504-507
Number of pages4
JournalEconomics Letters
Volume121
Issue number3
DOIs
Publication statusPublished - 2013 Dec 1
Externally publishedYes

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Keywords

  • Consumption
  • Government debt
  • Nonlinearity
  • Panel smooth transition regression error correction model

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

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