This article examines the effects of disaggregated government expenditure on investment using fixed- and random-effect methods. Using the government budget constraint, the analysis explores the effects of tax- and debt-financed expenditure for the full sample, and for subsamples of developed and developing countries. In general, tax-financed government expenditure crowds out more investment than debt-financed expenditure. Expenditure on social security and welfare reduces investment in all samples while expenditure on transport and communication induces private investment in developing countries.
Ahmed, H., & Miller, S. M. (2000). Crowding-out and crowding-in effects of the components of government expenditure. Contemporary Economic Policy, 18(1), 124-133. https://doi.org/10.1111/j.1465-7287.2000.tb00011.x