Are agents Ricardian? Evidence from the CBC survey

Nektarios Michail (), Theodosis Kallenos () and Ioanna Evangelou ()
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Nektarios Michail: Central Bank of Cyprus
Theodosis Kallenos: Central Bank of Cyprus
Ioanna Evangelou: Cyprus University of Technology

Economics Bulletin, 2024, vol. 44, issue 3, 1147 - 1152

Abstract: This paper provides survey estimates on whether economic agents show Ricardian-like behaviour, via providing the yes/no answers to the question "If there is a permanent increase in the level of government spending, we can expect an increase in taxation", in a survey conducted by the Central Bank of Cyprus in 2018. The findings suggest that only 12% of the respondents do not expect an increase in taxation, classifying them as non-Ricardian. Around 85% of the respondents expect an increase in taxation following an increase in government spending, suggesting that they display some degree of forward-looking behaviour. The finding holds important implications for fiscal policy and provides another potential explanation on why fiscal multipliers tend to be less than unity.

Keywords: Ricardian equivalence; survey; government; taxation (search for similar items in EconPapers)
JEL-codes: E2 H3 (search for similar items in EconPapers)
Date: 2024-09-30
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