TITLE

EXPENDITURE SWITCHING VS. ALTERING ABSORPTION: AN EMPIRICAL APPROACH

AUTHOR(S)
Gillespie, Robert W.; Rushing, Philip J.
PUB. DATE
July 1973
SOURCE
Southern Economic Journal;Jul73, Vol. 40 Issue 1, p26
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The present study is complementary to those cited although quite different in its approach. The purpose of these earlier studies conforms generally to the purpose given by Michaely for his study: "It is a search for some general outlines, or patterns, of the use of policies--a search which inevitably abstracts from individual properties" [4, 5].
Our study abstracts even further from specific policies and thus from the target-instrument variable framework characteristic of studies such as those cited.
The purpose is to classify the policies of a selected group of countries by looking at the real resource allocation implications, ex post, of their total policy mix. This objective is more modest than trying to identify the policy maker's target and instrument variables and the functions relating the one group to the other.
The analysis and empirical results suggest certain uniformities of behavior characterize developed nations. First, there was a strong tendency for the S/A ratio to be stable. Half of our 13 countries provide clear statistical support for this. Two other countries, Canada and France, indicated that although shifts occurred, they were infrequent; most of the observations fell clustered around two distinct values of S/A. This widespread stability can also be interpreted as reflecting the downward rigidity of total consumption in nations. Either interpretation implies that the final effect of collective policy measures and market forces tends to produce pure switching of resources between domestic investment and traded goods production. Second, sustained increases in the S/A ratio are rare. Only 3 of the 13 countries, Japan, Canada, and France, produced such a sustained increase.
ACCESSION #
5193427

 

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