Investment effects of departures from governmental present-value budget balance
The paper investigates whether departures from government borrowing constraints affect the relationship between fiscal-policy innovations and changes in the investment level. 'Break points', or apparent departures from present-value budget balance, are then identified. Next, the investment-deficit relationship is examined prior to and following identified break points in an effort to detect potential changes in behaviour. The investment-deficit relationship is quantified by examining posterior coverage bounds of impulse response functions. Britain appears to undergo such a break around 1973. Data from this country suggest that significantly more crowding out occurred following the identified breaks: in contrast, data from other comparison countries that do not appear to have experienced breaks indicate stable investment-deficit relationships.
Year of publication: |
1999
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Authors: | Elder, Erick |
Published in: |
Applied Economics. - Taylor & Francis Journals, ISSN 0003-6846. - Vol. 31.1999, 10, p. 1239-1247
|
Publisher: |
Taylor & Francis Journals |
Saved in:
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