The Armey Curve in Bulgaria (2000-18) – Theoretical Considerations and Empirical Results

EconStor Open Access Articles and Book Chapters, 2020, vol. 11, issue 1(21), 19-24

Abstract: In this paper we provide a theoretical basis for the so-called” Armey curve,” the inverted U-shape relationship between the level of government purchases and GDP growth, named after Armey (1995). We use an otherwise standard Keynesian model, augmented with a quadratic relationship between investment and lagged government expenditure, which was documented empirically. This modelling approach is a useful shortcut that aims to capture the common link shared by both variables, namely their dependence on the real interest rate, as suggested also by the extended static IS-LM model. This resulting dynamic relationship is a newly documented stylized fact, at least in Bulgarian data for the period 2000-2018, and the source in the extended Keynesian model that generates an Armey curve for Bulgaria.

Keywords: Armey curve; GDP growth; government purchases; Bulgaria (search for similar items in EconPapers)
JEL-codes: E12 E22 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/222007/1/Vasilev_TPREF_July2020.pdf (application/pdf)

Related works:
Journal Article: THE ARMEY CURVE IN BULGARIA (2000-18) – THEORETICAL CONSIDERATIONS AND EMPIRICAL RESULTS (2020)
Working Paper: The "Armey Curve" in Bulgaria (2000-18): Theoretical Considerations and Empirical Results (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:222007

DOI: 10.14505/tpref.v11.1(21).02

Access Statistics for this article

More articles in EconStor Open Access Articles and Book Chapters from ZBW - Leibniz Information Centre for Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().