NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Direct Substitution Between Government and Private Consumption in East Asia

Yum K. Kwan

NBER Working Paper No. 12431
Issued in August 2006
NBER Program(s):   PE

We investigate empirically the extent to which government consumption substitutes for private consumption in nine East Asia countries. Panel cointegrating regression uncovers a significantly positive elasticity of substitution between government and private consumption, implying on average government and private consumption are substitutes in East Asia. Country-by-country analysis, however, reveals diversity in the substitutability estimates. The four North East countries – China, Hong Kong, Japan, and Korea – tend to share similar and moderate values of the substitution elasticity. For the five ASEAN countries studied in this paper, the relationship between private and government consumption vary substantially, both in the sign and magnitude of the elasticity of substitution. Private and government consumption in Malaysia and Thailand are strong substitutes, but they are found to be complements in Indonesia and Singapore. In between is the Philippines which has a near zero elasticity of substitution.

download in pdf format
   (157 K)

email paper

This paper is available as PDF (157 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w12431

Published:

Users who downloaded this paper also downloaded these:
Kwan The Direct Substitution between Government and Private Consumption in East Asia
Mitsui Comment on "The Direct Substitution between Government and Private Consumption in East Asia"
Lamberte Comment on "The Direct Substitution between Government and Private Consumption in East Asia"
Campbell and Mankiw Consumption, Income and Interest Rates: Reinterpreting the Time Series Evidence
Ravn, Schmitt-Grohe, and Uribe w13328 Explaining the Effects of Government Spending Shocks on Consumption and the Real Exchange Rate
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us