scholarly journals Ricardian Equivalence revisited: introductory notes

2022 ◽  
Vol 42 (1) ◽  
pp. 113-127
Author(s):  
Maria Isabel Busato

ABSTRACT These notes aim to revisit the debate, the model, the results, and main objections to the validity of the Ricardian Equivalence Theorem as presented in Barro (1974). It is intended to explore his thesis that tax and debt are equivalent and have no real effect on perceived wealth, demand, the real interest rate or on the economy. The thesis refers to the analysis of the ways of financing debt at a given level of government expenditure and does not address the effects of an expansion of this volume of spending, nor it specifically analyzes the effects of an increase in public debt due to a tax reduction policy. After this presentation, the thesis is debated, consolidating some of the premises that are necessary to validate it. The purpose of the paper is to explore the first round of debates on the theme, explaining the restrictions to which the Barro-Ricardo Theorem or the Ricardian Equivalence Theorem is subject, based on the publications by Barro (1976), Buchanan (1976) and Feldstein (1976), all of them within the ‘realm’ of economic orthodoxy. The final section presents some remarks and an analysis of Barro’s later work (1989 and 1996).

2019 ◽  
Vol 52 (12) ◽  
pp. 1377-1394 ◽  
Author(s):  
Jan Jacobs ◽  
Kazuo Ogawa ◽  
Elmer Sterken ◽  
Ichiro Tokutsu

2018 ◽  
Vol 41 (3-4) ◽  
pp. 41-57
Author(s):  
Arbind Chaudhary ◽  
Mahesh Acharya

This paper aims to obtain a linear and causal relationship between government expenditure and real interest rate to the economic growth of Nepal for 1975-2015. The applied ARDL cointegration technique yields a long-run association among the variables. Furthermore, the variables: government expenditure, real interest rate, and other control variables-average rainfall and trade openness are established as long-run elements to the national income. The real interest rate has a substitution effect on the Nepalese household sector, hence it hurts the real income. However, trade openness, public expenditure, and average rainfall are recorded as the short-run determinants. Similarly, the study also explores the existence of a bidirectional causal relationship between government expenditure and real income.


1996 ◽  
Vol 78 (1) ◽  
pp. 111 ◽  
Author(s):  
Rene Garcia ◽  
Pierre Perron

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