IMPACT OF GOVERNMENT SPENDING ON PRIVATE CONSUMPTION USING ARDL APPROACH
Journal Title: Asian Economic and Financial Review - Year 2015, Vol 5, Issue 2
Abstract
This study investigates the impact of government spending on private consumption a case study of China. We used Autoregressive Distributed Lag (ARDL) approach to estimate the long and short run effects of the model using annual data from 1985 to 2013. The results of the study revealed that government spending have positive impact on private consumption. Therefore, government spending is a very good instrument to boost economy and encourage aggregate demand in China during recession. The negative and significant Error Correction Term (ECT) suggests that Chinese economy will adjust relatively quickly in response to an external shock to the overall development.
Authors and Affiliations
Khalid Khan*| School of Economics, Huazhong University of Science and Technology, (HUST), Wuhan, P.R. China, Chen FEI| School of Economics, Huazhong University of Science and Technology, (HUST), Wuhan, P.R. China, Muhammad Abdul Kamal| School of Economics, Huazhong University of Science and Technology, (HUST), Wuhan, P.R. China, Badar Nadeem Ashraf| School of Economics, Huazhong University of Science and Technology, (HUST), Wuhan, P.R. China
Keywords
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