Ghassan, Hassan B. (): Test de l’équivalence Ricardienne par la Modélisation SVAR. Published in: Revue de l’Institut National de. Emmanuel Thibault, “L’Equivalence Ricardienne dans les Modèles de Croissance avec Accumulation du Capital”, Revue d’Économie Politique, vol. , hypotheses of rational expectations and Ricardian equivalence can not be anticipations rationnelles et de l’equivalence ricardienne n’est pas rejetee par les .

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In particular, the equivalence theorem is compared critically to the traditional position ooof visualizing the effects of tax increases on private consumption as completely different from those of bond issuance, at a given level of government expenditure. The interpretation given in the present text is that individuals in solvent coun. This happens because households tend to internalize the public sector’s policy reaction function in periods, in which fiscal ‘healthiness’ is questioned by the government and in the press.

This supports the interpretation that the large budget deficit, financed especially by debt, has been a very important factor behind the significant increase in real interest rates. Since bonds are loans, they must eventually be repaid—presumably by raising taxes in the future.

equivalenve Debt, deficits and finite horizons. The Ricardian view of equivalence between debt and tax financing is tested in the context of a pooled cross-section, time-series macroeconomic model for 49 countries.

Having ordered the sample countries according to debt ratios and living standards, we may proceed to the empirical investigation of consumer behaviour, after tackling a major problem in estimating equation 8: Once anticipated and unanticipated series are available, equation 9 can be estimated by an appropriate technique.

The appropriate lag length for each variable in each equation is specified by using the Akiake’s final prediction error FPE criterion. In drawing inferences, however, as to the economic effects of substituting debt for taxes, on the basis of the absolute values of the fiscal instruments, may lead to the loss of valuable information embedded in the ratios of these instruments.


The effects of budget deficit on national saving in the OECD. By using this ricardiienne, you agree to the Terms of Use and Privacy Policy.

Ricardian equivalence – Wikipedia

Runkle, David E, So countercyclical fiscal policy can be effective if any one of the conditions necessary for the equivalence does not hold. Some methodological issues Knowledge obtained from testing the effects on consumption of varying degrees of public indebtedness for a single country or for a small number of countries cannot be as much reliable as information which can be secured from observing consumer behaviour in a large sample of countries.

Nevertheless, he argued that “it is much less clear that this complication would imply systematic errors in a ricafdienne such that public debt issue raises aggregate demand.

The public expenditures and private investment: The estimates for the coefficients on tax revenue in Table 2, however, indicate that Ricardian equivalence holds for high-and low-income solvent countries, when expectations are not included among equjvalence regressors, as well as for high-and low-income debt-ridden countries, when expectations are accounted for.

The data set for the present study has been constructed from three international sources National Accounts Statistics United Nations for private final consumption expenditure and GNP International Financial Statistics Yearbook IMF for monetary base and deposits and Government Finance Statistics Yearbook IMF for government expenditure on goods and services central government deficit public debt and rax reve nue The asset holdings of the household sector are defined as the sum of demand depo sits currency time and savings accounts and public debt Data for other wealth items residential structures consumer durables corporate equities foreign bonds and so on were not available for the majority of the sample countries.


Given the importance of the relative research on deciding whether fiscal policy tools have a great limited degree of confidence, it is surprising that the state of indebtedness has received so little attention in the literature on the subject matter.

Incorporating expectations Solvent countries High-income 0. The traditional view argues that tax-financed government expenditure have profoundly different repercussions than expenditures financed by bond issuance. Such constraints diminish households’ ability to substitute consumption intertemporally, as is postulated by REH. Retrieved from ” https: The Theory of New Classical Macroeconomics. If the Equivalende equivalence hypothesis is true, the rational consumers of the economy, who expect the government to raise taxes, try to reduce their consumption and increase their savings.

The choice is therefore “tax now or tax ricardirnne.

Ricardian equivalence

The solution of 8 in terms of C provides an approximation to the Euler equation for consumption. Thus, the representative household is assumed to have a stationary utility function that is defined over a composite’ good’, as shown below: Help us Corrections Found an riicardienne or omission? This is especially true for risk-averse consumers: National Saving so Low? Vector autoregressions and reality. The Ricardian approach to budget deficits.

Insignificant significant estimates are interpreted as lending support to the Ricardian argument traditional viewin a theoretical framework which utilizes the fiscal variables in absolute terms, dicardienne than in ratios.