This large scale econometric study finds private borrowing and spending decline as government deficits grow, due to “crowd out” effect resulting from financing the deficits from the limited pool of available loanable funds, and crowd out completely offsets stimulus effects. This result is...

This paper is a revision of Rensselaer Polytechnic Institute’s Working Papers in Economics Series, No. 803, entitled “How Falling Exchange Rates 2000 – 2007 Have Affected the U.S. Economy and Trade Deficit (Evaluated Using the Federal Reserve’s Real Broad Exchange Rate)”. It expands...

Declining consumer confidence is cited as a cause of declining consumer demand, independent of changes income, wealth, etc. If so, it may also affect demand for investment goods, as businesses adjust production to reflect changes in consumer confidence and its anticipated effect on demand. This...

Declining consumer confidence is cited as a cause of declining consumer demand. If so, it may also affect business spending on investment goods, as businesses adjust production in response to changes in consumer confidence that will affect demand. This paper examines effects on consumption and...

This paper examines (econometrically) which interest rates seem most systematically related to investment and the GDP and how long the lag time is before changes in these interest rates affect the GDP. We conclude that the Prime interest rate has the most important and systematic influence on...

Rising exchange rates strengthen the dollar and lower prices on imported consumer goods. Lower import prices have two effects. (1) A substitution effect that shifts demand from domestically produced goods to imports. (2) An income effect that increases demand for imports even further. However,...

Separate macroeconomic consumption demand functions are developed and tested for (1) durable goods, (2) nondurable goods and (3) services. These are compared for consistency with econometric studies of total consumer demand. Key factors determining demand for these goods are tested using U.S....

This paper compares the demand for the three individual components of aggregate investment demand: (1) demand by businesses for plant and equipment, (2) business inventory investment and (3) residential housing construction. The models tested are largely based on Keynesian theories of business...

Keynes held that it was mainly current income that determined the demand for consumer goods and services. He also suggested wealth, interest rates, and taxes may have smaller effects. Later theories by Modigliani and Friedman, based on long term average income as the income variable determining...

In the Keynesian consumption function, current income is asserted to be the main determinant of consumption. This paper examines the extent to which the Keynesian consumption function explains 1960 - 2000 U.S. consumption patterns. The results are compared to the longer term average income...