EconPapers    
Economics at your fingertips  
 

Does Ricardian equivalence hold? The relationship between public and private saving in Spain

Francisco de Castro Fernández () and José Luis Fernández
Additional contact information
José Luis Fernández: Banco de España

Journal of Applied Economics, 2013, vol. 16, 251-274

Abstract: This paper aims to test the validity of the Ricardian proposition for the Spanish economy in two different frameworks: a) in traditional structural consumption equations and, b) in consumption functions stemming from Euler equations derived from a consumer’s maximization problem. Our results lean toward rejection of the Ricardian proposition, although some degree of substitution between public and private saving is detected. Moreover, we provide some evidence of consumers becoming increasingly Ricardian with the level of government indebtedness as it may trigger sustainability concerns. In terms of policy implications, these results would suggest that until 2007 fiscal policy in Spain enjoyed some room of manoeuvre to exert its countercyclical role. The sovereign debt crisis has exhausted such margin. An online appendix is available.

Keywords: Ricardian equivalence; debt neutrality; saving; fiscal policy (search for similar items in EconPapers)
JEL-codes: E62 E21 H30 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://ucema.edu.ar/publicaciones/download/volume16/castro.pdf Paper (application/pdf)
https://ucema.edu.ar/publicaciones/download/volume16/castro_appendix.pdf Online Appendix (application/pdf)

Related works:
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: https://EconPapers.repec.org/RePEc:cem:jaecon:v:16:y:2013:n:2:p:251-274

Access Statistics for this article

Journal of Applied Economics is currently edited by Germán Coloma and Mariana Conte Grand and Jorge M. Streb

More articles in Journal of Applied Economics from Universidad del CEMA Contact information at EDIRC.
Bibliographic data for series maintained by Valeria Dowding ().

 
Page updated 2021-04-08
Handle: RePEc:cem:jaecon:v:16:y:2013:n:2:p:251-274