Prosperity or Stagnation: The Role of Government Expenditures

Pak Hung MO*

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    1 Citation (Scopus)


    The focus of this paper is to examine the effects and mechanism of government expenditures (GEs) in determining the long-term inflation differentials across countries. For this purpose, we formulate a theoretical model and the related regression system. The models allow us to understand and quantify the supply-side (SS) and demand-side (DS) effects of GEs in determining prosperity or stagnation across countries. This study provides cross-country evidences and related mechanisms supporting the hypothesis and conclusion that active short-term AD policies and over-estimated potential output, as argued in Orphanides (2003), were contributive to the Great Inflation.

    Original languageEnglish
    Pages (from-to)1153-1176
    Number of pages24
    JournalSingapore Economic Review
    Issue number5
    Early online date7 Dec 2017
    Publication statusPublished - Sept 2021

    Scopus Subject Areas

    • Economics and Econometrics

    User-Defined Keywords

    • demand-side
    • government expenditures
    • growth
    • Inflation
    • investment
    • prosperity
    • stagnation
    • supply-side


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