THRESHOLD EFFECTS OF GOVERNMENT DEBTS ON PRIVATE CONSUMPTION IN OPEC COUNTRIES

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VAHABI ORDAKLOO NEGAR; SHAHBAZI KIYUMARS; KHODAVAISI HASSAN

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Journal: Journal of Quantitative Economics Year:2016 | Volume:13 | Issue:3 Page(s): 111-135

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Title

THRESHOLD EFFECTS OF GOVERNMENT DEBTS ON PRIVATE CONSUMPTION IN OPEC COUNTRIES

Author(s)

VAHABI ORDAKLOO NEGAR | SHAHBAZI KIYUMARS | KHODAVAISI HASSAN | Issue Writer Certificate

Keywords

THRESHOLD EFFECTQ2

GOVERNMENT DEBTQ1

PRIVATE CONSUMPTIONQ2

Abstract

Over the last decade, especially after the recent global financial crisis, the governments financial plans and their effects on macroeconomic variables, has been the central issue of debate among economists. PRIVATE CONSUMPTION is also among the variables that are in close relationship with government programs.Because of the importance of PRIVATE CONSUMPTION on the one hand and the problem of chronic budget deficit and growing public debt in the developing countries on the other hand, this paper investigates nonlinear effects of GOVERNMENT DEBT on PRIVATE CONSUMPTION in OPEC countries for the period of 2000 to 2012, using Panel Smooth Transition Regression (PSTR) model. To this end, Debt-to- GDP ratio is used as transition variable. The results showed a strong nonlinear relationship between the variables studied and suggest a two-regime model with a threshold parameter of 7 percent and the slope parameter of 8669/1. In the first regime, GOVERNMENT DEBTs have a positive impact on PRIVATE CONSUMPTION but crossing the threshold value, in the second regime, have a negative impact.Therefore, in high levels of GOVERNMENT DEBT because the probability of the government's ability to repay debt and the resulting increase in tax from people to finance this debt, is high, Thus, households expect higher taxes in the future, and the current consumption can be reduced.

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APA: Copy

VAHABI ORDAKLOO, NEGAR, SHAHBAZI, KIYUMARS, & KHODAVAISI, HASSAN. (2016). THRESHOLD EFFECTS OF GOVERNMENT DEBTS ON PRIVATE CONSUMPTION IN OPEC COUNTRIES. JOURNAL OF QUANTITATIVE ECONOMICS (QUARTERLY JOURNAL OF ECONOMICS REVIEW), 13(3), 111-135. SID. https://sid.ir/paper/110813/en

Vancouver: Copy

VAHABI ORDAKLOO NEGAR, SHAHBAZI KIYUMARS, KHODAVAISI HASSAN. THRESHOLD EFFECTS OF GOVERNMENT DEBTS ON PRIVATE CONSUMPTION IN OPEC COUNTRIES. JOURNAL OF QUANTITATIVE ECONOMICS (QUARTERLY JOURNAL OF ECONOMICS REVIEW)[Internet]. 2016;13(3):111-135. Available from: https://sid.ir/paper/110813/en

IEEE: Copy

NEGAR VAHABI ORDAKLOO, KIYUMARS SHAHBAZI, and HASSAN KHODAVAISI, “THRESHOLD EFFECTS OF GOVERNMENT DEBTS ON PRIVATE CONSUMPTION IN OPEC COUNTRIES,” JOURNAL OF QUANTITATIVE ECONOMICS (QUARTERLY JOURNAL OF ECONOMICS REVIEW), vol. 13, no. 3, pp. 111–135, 2016, [Online]. Available: https://sid.ir/paper/110813/en

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