TY - JOUR
T1 - Revisiting Aschauer via ICM estimation
AU - Song, Hosin
N1 - Publisher Copyright:
© 2014, © 2014 Taylor & Francis.
PY - 2014/11/2
Y1 - 2014/11/2
N2 - In this article, the effect of public expenditure on consumers’ welfare is considered by estimating the substitutability of public expenditure for private consumption in the context of Aschauer (1985). Aschauer’s full information maximum likelihood estimation requires much more assumptions than the equilibrium condition of his model. Therefore, this study proposes an alternative estimation approach under a weaker condition, which is equivalent to the equilibrium condition of the model. In particular, I propose to use an integrated conditional moments estimation and apply the proposed estimation to US economy. The estimation results show that Aschauer’s model specification is not rejected at conventional significance levels, even though substitutability of public expenditure for private consumption is not significantly different from zero.
AB - In this article, the effect of public expenditure on consumers’ welfare is considered by estimating the substitutability of public expenditure for private consumption in the context of Aschauer (1985). Aschauer’s full information maximum likelihood estimation requires much more assumptions than the equilibrium condition of his model. Therefore, this study proposes an alternative estimation approach under a weaker condition, which is equivalent to the equilibrium condition of the model. In particular, I propose to use an integrated conditional moments estimation and apply the proposed estimation to US economy. The estimation results show that Aschauer’s model specification is not rejected at conventional significance levels, even though substitutability of public expenditure for private consumption is not significantly different from zero.
KW - integrated conditional moment
KW - private consumption
KW - public spending
UR - http://www.scopus.com/inward/record.url?scp=84927176475&partnerID=8YFLogxK
U2 - 10.1080/13504851.2014.912029
DO - 10.1080/13504851.2014.912029
M3 - Article
AN - SCOPUS:84927176475
SN - 1350-4851
VL - 21
SP - 1111
EP - 1115
JO - Applied Economics Letters
JF - Applied Economics Letters
IS - 16
ER -