Economic Studies And Political Science

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Name : Abdelmonem Lotfy Mohamed Kamal Position: Assistant Professor of Economics and Public Finance : Faculty of Economic Studies and Political Science : Beni Suef University : Egypt E-mail : alotfy@eps.bsu.edu.eg Mailing Address: (9/8) Alshatr (2) Mashroo Iskan Sherket Almaadi, Zahraa Almaadi, Cairo, Egypt “Testing the Relation between Government Spending and Private Consumption in Egypt” Introduction: During the period 2004 to 2015, Egyptian domestic demand has continued to be the main driving force for the Egyptian economy as a result for a package of instruments that constitutes fiscal expansion. The main pillar in this package of expansionary fiscal…show more content…
With regard to the relationship between government spending and private consumption, two opponent points of view can be found. The first one states that there is a relation of substitution between government spending and private consumption. However, the other one concludes that government spending and private consumption are complements. Therefore, it can be easily seen that it is a controversial issue for both economists and policy makers. According to the literature, several studies have been done to test the relationship between government spending and private consumption in the context of industrialized countries, OECD countries, and some Asian countries. Of course, Egypt was not one of these studied cases. Moreover, when a study was done to investigate this point of research in the context of a group of African countries (Anoruo 2005) that performed a panel data analysis for 24 countries; Unfortunately, Egypt was not included in this panel data analysis. As a result, there is a gap in the literature of testing the relationship between government spending and private consumption for Egypt. Consequently, this study aims to provide an answer to this important question; does government spending substitute or complement private consumption in Egypt? Literature Review: Surveying the literature of testing the relationship between government spending and private
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