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Title: |
Ricardian Equivalence: Further Evidence |
| Author: |
Chakraborty,
Atreya; Farah, Abdikarim M. |
| Author
Affiliation: |
Brandeis U; IMF |
| Source: |
International Economic Journal, Autumn 1996, v. 10, no. 3, pp. 19-31 |
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Publication Date: |
Autumn 1996 |
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Abstract: |
The Ricardian Hypothesis states that for a
given level of government expenditure, aggregate demand is neutral to
changes in the debt-to-tax ratio. Many economists argue that the private
and government sectors have different planning horizons which will lead
to deviations from Ricardian equivalence. In this paper, by using a
model that nests both Ricardian equivalence and an alternative
hypothesis, we empirically investigate whether the private sector has a
shorter planning horizon than the government sector. The evidence
presented in this study suggests that there is no difference between the
planning horizons of the private and government sectors. |
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