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Spotřební funkce a princip Ricardovské ekvivalence v malé otevřené ekonomice

The consumption function and Ricardian equivalence in a small open economy

Martin Mandel and Vladimír Tomšík

Politická ekonomie, 2003, vol. 2003, issue 4

Abstract: The paper provides a comprehensive survey of the theories of consumption functions. The Keynesian consumption function is examined in more detail under a condition of a small open economy. The paper explains the variety of consumption expenditures in the Czech Republic between 1993 - 2001. In this paper an enlarged version of the Czech consumption function, also tests Ricardian equivalence. Empirical results imply that consumer behaviour reacts rationally to an external imbalance and the economy heads to equilibrium by itself. However, the consumption reaction seems to be irrational under an internal balance. Consumers do not voluntarily reduce their consumption when deficit of public finance appears but they are forced to do so when interest rates increase as a result of the internal imbalance.

Keywords: monetary policy; convergence; fiscal policy; consumption; Ricardian equivalence; terms of trades; balance of income (search for similar items in EconPapers)
JEL-codes: E21 F15 F32 F43 (search for similar items in EconPapers)
Date: 2003
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