A THREE-DIMENSIONAL APPROACH ON THE RICARDIAN EQUIVALENCE IN ROMANIA

Daniel Ştefan Belingher ()
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Daniel Ştefan Belingher: Institute for Economic Forecasting, Romanian Academy

Romanian Economic Business Review, 2016, vol. 11, issue 2, 112-122

Abstract: This paper follows the validity of the Ricardian Equivalence Hypothesis in Romania for the period 2004 – 2013. In order to test this hypothesis, there has been used a Vector Error Correction Model, with three variables: households’ consumption, real GDP and budgetary revenues. The frequency of the data used is quarterly. The role of this model is to test the reaction of the households in case of occurrence of a shock in the budgetary revenues (the shock represents an increase in taxation). The results show the fact that the Ricardian Equivalence is not confirmed as being a valid theory for the Romanian economy

Keywords: consumption; ricardian equivalence; budgetary revenues (search for similar items in EconPapers)
Date: 2016
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