Fiscal Policy and Private Sector Saving Behavior in Developing Economies

Nadeem U. Haque
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Nadeem U. Haque: International Monetary Fund

IMF Staff Papers, 1988, vol. 35, issue 2, 316-335

Abstract: Tax or debt financing of a given rate of government expenditures would, according to the well-known Ricardian equivalence proposition, have equivalent effects on aggregate demand. Among the sources of a deviation from equivalence is the possibility that the government and the private sector have different planning horizons. The paper finds no empirical support for differing planning horizons across sectors in a group of 16 developing economies and, therefore, rules out such differences as a source of deviation from equivalence.

Date: 1988
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