A NOTE ON THE EFFECTS OF GOVERNMENT EXPENDITURES ON PRIVATE CONSUMPTION

In the tradition of the permanent income hypothesis of consumption this paper examines the effects of government expenditures on aggregate consumption in Greece during the years 1958-87, but unlike previous empirical specifications it focuses on the impact of different components of government expenditures. The econometric estimates indicate that consumption expenditures are conditional on perceptions of permanent income as well as government spending, and reveal a differential pattern of responses of private consumption to government spending on public goods, health, education, and investment.