The Threshold Effect of Government Debt on Private Sector Consumption in Iran

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MOHAMMADZADEH ASL NAZI

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Journal: Journal of Economic Studies and Policies Year:2019 | Volume:14 | Issue:2 (110) Page(s): 105-124

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Title

The Threshold Effect of Government Debt on Private Sector Consumption in Iran

Author(s)

MOHAMMADZADEH ASL NAZI | Issue Writer Certificate

Keywords

Private consumptionQ1

Government DebtQ2

Nonlinear effectsQ2

Threshold modelQ1

Abstract

Governmental debts mean income reduction and increase of government expenditures with impression on household disposable income that influence on their consumption. This impact, in some cases has expansion positive effects and in some other cases, reduces consumption, investment and economic growth and other values. The main aim of this paper is to study the linear and non-linear relations between consumption of private sector and Government Debts in Iran. For this purpose, the period between 1358-1395 years was considered and after confirmation of non-linear relation, Government Debt threshold was achieved by Smooth Transition Regression method. Results show that in the considered time period, the average Government Debt to GDP was around 60%, but threshold was estimated 46%. In other words, passing threshold causes by increasing Government Debts and probability of government inability to debts repayment, consumption of private sector will be reduced indirectly. So Policy makers in Iran cannot leverage Government Debt as a positive expansion in Iran's economy.

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APA: Copy

MOHAMMADZADEH ASL, NAZI. (2019). The Threshold Effect of Government Debt on Private Sector Consumption in Iran. JOURNAL OF ECONOMIC STUDIES AND POLICIES, 14(2 (110) ), 105-124. SID. https://sid.ir/paper/400997/en

Vancouver: Copy

MOHAMMADZADEH ASL NAZI. The Threshold Effect of Government Debt on Private Sector Consumption in Iran. JOURNAL OF ECONOMIC STUDIES AND POLICIES[Internet]. 2019;14(2 (110) ):105-124. Available from: https://sid.ir/paper/400997/en

IEEE: Copy

NAZI MOHAMMADZADEH ASL, “The Threshold Effect of Government Debt on Private Sector Consumption in Iran,” JOURNAL OF ECONOMIC STUDIES AND POLICIES, vol. 14, no. 2 (110) , pp. 105–124, 2019, [Online]. Available: https://sid.ir/paper/400997/en

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