"The Impact of Government Spending on the Private Sector: Crowding-out versus Crowding-in Effects"

"It is doubtless a source of great mystery to the public why economists are unable to agree on the answer to a simple question: will austerity plans, such as those announced in Britain [and in Portugal] this month, be good or bad for the economy?"
You may keep reading this ed-piece from The Economist after clicking here.

In it there is a reference to a recently published paper by a team of 2 economists, one of whom is a member of UMinho's NIPE research center, Ricardo Sousa, with the title above.

Here is this Paper Abstract:
"The aim of this paper is to analyze the impact of government spending on the private
sector, assessing the existence of crowding-out versus crowding-in effects. Using a
panel of 145 countries from 1960 to 2007, the results suggest that government spending
produces important crowding-out effects, by negatively affecting both private
consumption and investment. Moreover, while the effects do not seem to depend on the
different phases of economic cycle, they vary considerably among regions. The results
are economically and statistically significant, and robust to several econometric
techniques." You may download and read it from here.