%A VASILEV, Aleksandar %D 2020 %T THE ARMEY CURVE IN BULGARIA (2000-18) – THEORETICAL CONSIDERATIONS AND EMPIRICAL RESULTS %K %X 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. %U https://journals.aserspublishing.eu/tpref/article/view/5244 %J Theoretical and Practical Research in Economic Fields %0 Journal Article %R 10.14505/tpref.v11.1(21).02 %P 21-26%V 11 %N 1 %@ 2068-7710 %8 2020-06-30