Ricardian Equivalence: An Empirical Application to the Portuguese Economy

Carlos Marinheiro ()

International Economics Working Papers Series from Katholieke Universiteit Leuven, Centrum voor Economische Studiën, International Economics

Abstract: It is the purpose of this paper to focus on the consequences of the Ricardian offset to the conduct of stabilising fiscal policies. If equivalence prevails there is no scope for effective stabilising fiscal policies. A review of the theoretical requirements of Ricardian equivalence reveals that they are not likely to be fulfilled in practice. However, the brief survey of the empirical applications shows that the published empirical evidence in inconclusive. An empirical application for the Portuguese economy is carried out. The tests are based on reduced-form consumption functions and on the Euler equation approach. The overall results are ambiguous.

Keywords: Ricardian equivalence; Portugal; fiscal policy (search for similar items in EconPapers)
Pages: 41 pages
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Citations: View citations in EconPapers (11)

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