Ricardian Consumers With Non‐Keynesian (And Possibly Ricardian) Propensities

James Pemberton

Scottish Journal of Political Economy, 2004, vol. 51, issue 1, 95-104

Abstract: Barsky, Mankiw and Zeldes (1986) have argued that uncertainty about future income can generate strong ‘Keynesian’ responses to tax changes by consumers who have far‐sighted ‘Ricardian’ preferences. The paper argues that this conclusion relies on an inappropriate treatment of future tax policies. Using a more appropriate framework generates behaviour which may instead be approximately Ricardian, and which, if it deviates from the Ricardian benchmark, usually does so in an anti‐Keynesian direction. If Keynesian behaviour is observed, therefore, it requires a different explanation.

Date: 2004
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