TY  - JOUR
AU  - Kwan, Yum K
TI  - The Direct Substitution Between Government and Private Consumption in East Asia
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12431
PY  - 2006
Y2  - August 2006
DO  - 10.3386/w12431
UR  - http://www.nber.org/papers/w12431
L1  - http://www.nber.org/papers/w12431.pdf
N1  - Author contact info:
Yum-keung Kwan
Department of Economics
City University of Hong Kong
83 Tat Chee Avenue
Kowloon, HONG KONG
E-Mail: efykkwan@cityu.edu.hk
M1  - published as Yum K. Kwan. "The Direct Substitution between Government and Private Consumption in East Asia," in Takatoshi Ito and Andrew K. Rose, editors, "Fiscal Policy and Management in East Asia" University of Chicago Press (2007)

AB  - 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 %u2013 China, Hong Kong, Japan, and Korea %u2013 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.
ER  -