Substitution between Private and Public Consumption in Australia.
Large increases in the private sector's savings ratio, during a period of rapid growth in the relative size of the public sector, has led to the suggestion that substitution between private and public consumption may be an important feature of the Australian economy (Clements [1979]). In this paper, empirical estimates are presented that indicate that no such substitution exists. The estimates are derived from a theoretical model of consumption which is based on intertemporal optimization in a stochastic environment. The estimates also suggest that private-sector consumption behavior is consistent with the joint hypothesis of rational expectations and Ricardian equivalence. Copyright 1989 by The Economic Society of Australia.
Year of publication: |
1989
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Authors: | Olekalns, Nilss |
Published in: |
The Economic Record. - Economic Society of Australia - ESA, ISSN 1475-4932. - Vol. 65.1989, 188, p. 16-26
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Publisher: |
Economic Society of Australia - ESA |
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