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A new Framework is provided to measure the impact of an increase in government expenditure on private investment. For this purpose a framework based on the Box–Cox transformation is introduced and tested using annual time-series data, 1958–1988, from 25 OECD countries. The results obtained support the ‘accelerator principle’ conclusively and the ‘crowding out’ hypotheses.
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Bairam et al. (1993) studied this question.
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