Is the Relationship between Government Spending and Private Consumption in Egypt Symmetric?
جاري التحميل...
التاريخ
المؤلفين
عنوان الدورية
ردمد الدورية
عنوان المجلد
الناشر
Margin: The Journal of Applied Economic Research
خلاصة
The aim of this paper is to test for the presence of a symmetric relationship directing from governmental spending to consumption spending in Egypt. The study used data covering the period from 1970 to 2017; these data were obtained from the World Bank dataset published on the Internet. Concerning the applied aspect, the study runs two tests. The first is a cointegration test on consumption function by using the ARDL approach, which involves many explanatory variables including the governmental spending. The results revealed that t-bound and F-bound tests refer to the presence of a long-term or cointegration relationship. However, exploring the effect of governmental spending on growth revealed that there is no long-term effect on consumption from governmental spending. The second test was run to complete the research on the nature of the relationship after dividing the effect of governmental spending into positive and negative values. This test was run by using the NARDL approach.
The results revealed that the relationship is asymmetric between governmental spending and consumption. Consequently, there are different effects of the positive and negative governmental shocks. This result provides applied evidence of the research hypothesis, which says that the relationship between the two variables is not linear.
The research results provide empirical evidence that the relationship between governmental and consumption spending is a crowd-out relationship, at least for developing countries represented well by the Egyptian economy. This result is in agreement with Bailey (1971), Ho (2001), Bouakez and Rebei (2007) and (Kwan, 2006). The substitutability coefficient was 0.8699 in the case of the positive shocks from governmental spending.