Abstract
Government spending is disaggregated into investment and consumption components to investigate both theoretically and empirically whether public sector consumption and investment spending crowd out private sector expenditures in the same categories. The hypothesis is that the composition of public sector expenditures may also be important in influencing the composition of private expenditures, rather than just the total level of public expenditure. The empirical results do not indicate that public expenditures in these two categories significantly influence their private sector counterparts.
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