PROSPERITY OR STAGNATION: THE ROLE OF GOVERNMENT EXPENDITURES

Pak Hung MO*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

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)1-24
Number of pages24
JournalSingapore Economic Review
DOIs
Publication statusAccepted/In press - 7 Dec 2017

Scopus Subject Areas

  • Economics and Econometrics

User-Defined Keywords

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

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