Abstract An empirical test of the effect of governmental expenditure on private consumption shows that the effect is obviously nonlinear when the scale of finance for governmental expenditure and the structure of government expenditure are threshold—with the rise in the scale of finance, governmental expenditures crowin effect on private consumption increases, and with the rise in the share of productive expenditure, the crowin effect on private consumption decreases; however, governmental productive expenditure has remarkable nonlinear effect on private consumption when the level of economic and infrastructural are threshold variables—as economy grows, governmental productive expenditures crowin effect on private consumption increases and with the improvement of infrastructure, the effect of productive expenditures on private consumption changes from insignificant crowdout effect to significant crowdin effect.
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