Crowding-out and crowding-in effects of the components of government expenditure

This article examines the effects of disaggregated government expenditure on investment using fixed- and random-effect methods. Using the government budget constraint the analysis explores the effects of tax- and debt-financed expenditure for the full sample, and for subsamples of developed and developing countries lit general tax-financed government expenditure crowds out move investment than debt-financed expenditure. Expenditure on social security and welfare reduces investment in all samples while expenditure on transport and communication induces private investment in developing countries. (JEL E2, E6, O4).