Financing the Fiscal Deficit in Pakistan: Evidence on Ricardian Equivalence

Neelma Shamsi () and Muhammad Waqas ()
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Neelma Shamsi: The University of Lahore, Sargodha Campus, Pakistan
Muhammad Waqas: UMR-SADAPT Agroparistech, France

Sukkur IBA Journal of Management and Business, 2016, vol. 3, issue 2, 39-49

Abstract: This study investigated the validity of Ricardian equivalence hypothesis in case of Pakistan. Annual time series data from 1978 to 2013 has been used for analysis. Two models have been estimated; structural consumption function and structural saving function. The results of unit root tests explored that all the variables have different order of integration. The results of ARDL co-integration approach verified the existence of a long run relationship among variables for both models. By using OLS, wald test rejects the restrictions on both models and concludes that Pakistan is a non-ricardian economy.

Keywords: Ricardian Equivalence Theory; Budget Deficit; Pakistan (search for similar items in EconPapers)
JEL-codes: H68 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ibajmb:0025

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