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| Author: | Fiorito, R. Kollintzas, T. |
| Title: | Public goods, merit goods, and the relation between private and government consumption |
| Journal: | European Economic Review
2004 : DEC, VOL. 48:6, p. 1367-1398 |
| Index terms: | Public goods Government Consumption Europe Models |
| Language: | eng |
| Abstract: | This article studies the relationship between private and public consumption with a permanent income model. The government consumption is divided into two categories: public goods, e.g. defence, public order, and justice, and merit goods, e.g. health, education, and other services possible to provide also privately. The results indicate that while public goods substitute private consumption, merit goods complement it. However, merit goods consumption is about two-thirds of government consumption, which implies that in the aggregate the government and private consumption are complements. The data used was from 1970 to 1996 from 12 European countries. |
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