Ricardian Equivalence for Sub-national States

Jo Gray and Joe Stone

University of Oregon Economics Department Working Papers from University of Oregon Economics Department

Abstract: The authors test Ricardian equivalence within an endogenous growth model for U.S. states, which have high rates of migration relative to most countries. Results are consistent with both Ricardian equivalence and endogenous growth, despite the relative ease of migration. Increases in productive government expenditures increase long-run growth by the same amount, for example, whether financed by taxes or bonds. State rules limiting the use of bond financing may play a role in supporting Ricardian equivalence. The study provides the first explicit test of Ricardian equivalence for sub-national states in the context of an endogenous growth model.

Pages: 12
Date: 2005-12-01, Revised 2005-12-01
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http://economics.uoregon.edu/papers/UO-2006-2_Gray_Sub-national.pdf (application/pdf)

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Journal Article: Ricardian equivalence for sub-national states (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ore:uoecwp:2006-2

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