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The (In)Validity of the Ricardian Equivalence Theorem—Findings from a Representative German Population Survey

Bernd Hayo and Florian Neumeier ()

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: In this paper, we utilise data from a German population survey to test the validity of the Ricardian equivalence theorem (RET). In 2013, 2,000 representatively chosen people were asked whether they have altered their consumption and saving behaviour in response to the significant increase in public debt that occurred between 2008 and 2012. Our findings suggest that, in general, RET does not hold. Only 7% of our respondents state that they consume a smaller proportion of their income and save a larger proportion in response to public debt accumulation. Moreover, using multinominal logit regressions, we find that individuals’ consumption responses are significantly related to their economic situation, time preferences, education, and age.

Keywords: Ricardian equivalence; public debt; private consumption; private saving; survey; Germany (search for similar items in EconPapers)
JEL-codes: D12 D91 E21 H31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-ger and nep-mac
Date: 2016
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http://www.uni-marburg.de/fb02/makro/forschung/mag ... 016/11-2016_hayo.pdf First 201611 (application/pdf)

Related works:
Journal Article: The (In)validity of the Ricardian equivalence theorem–findings from a representative German population survey (2017) Downloads
Working Paper: The (In)validity of the Ricardian equivalence theorem-findings from a representative German population survey (2017)
Working Paper: The (In)Validity of the Ricardian Equivalence Theorem – Findings from a Representative German Population Survey (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201611

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