Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/259869 
Year of Publication: 
2003
Series/Report no.: 
Working Paper No. 2003:3
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
Abstract: 
Recently, it has been suggested that the effect of government expenditure on private consumption is dependent on the level of public debt. More specifically, a higher public debt implies a less Keynesian response in private consumption. In this paper we investigate if this theory is supported by Swedish data 1970-1997 by estimating a consumption function allowing for time-varying parameters. Our main finding is that the effect of government expenditure has become less Keynesian over time. This coincides with a large increase in public debt, lending support to the theoretical predictions.
Subjects: 
Government expenditure
private consumption
time-varying parameters
JEL: 
E12
E21
E62
Document Type: 
Working Paper

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