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Published in:
2017 | OriginalPaper | Chapter
7. Test Results: Consumer Spending and Borrowing Models (Two-Variable Deficit)
Author : John J. Heim
Published in: Crowding Out Fiscal Stimulus
Publisher: Springer International Publishing
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Abstract
This chapter undertakes 17 tests of different models to determine if the government deficit has a significant, measurable crowd out effect on consumption as well as a stimulus effect. The models included six consumer spending and 11 consumer borrowing; five were OLS, 12 were 2SLS. Results overwhelmingly indicated crowd out adversely affected consumption spending. The two separate variable (Revenue, Spending) definition of the deficit was used, so regression coefficients could be calculated for each, to see if the two types had different effects.