Euler Testing Ricardo and Barro in the EUs

Antonio Afonso

No 2008/23, Working Papers from Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.

Abstract: According to Keynesian economics wisdom, government debt has an effect on the economy since consumers see government debt as net wealth. However, according to the debt neutrality hypothesis of Ricardo (1817), popularised by Barro (1974), such effects would be absent. This paper’s results, obtained from Euler equation estimations using a panel data approach, indicate that it would be wise to reject the debt neutrality hypothesis for the EU and that higher government indebtedness could actually deter private consumption.

Keywords: debt neutrality; private consumption; EU; panel data (search for similar items in EconPapers)
JEL-codes: C23 E21 E62 H63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2008-04
View list of references View citations in EconPapers

Downloads: (external link)
http://pascal.iseg.utl.pt/~depeco/wp/wp232008.pdf (application/pdf)

Related works:
Journal Article: Euler testing Ricardo and Barro in the EU (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:ise:isegwp:wp232008

Access Statistics for this paper

More papers in Working Papers from Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.
Address: Department of Economics, School of Economics and Management (ISEG), Technical University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Series data maintained by Vitor Escaria ().