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An experimental analysis of two departures from Ricardian equivalence

Author

Listed:
  • Roberto Ricciuti

    (Departiment of Economics, Royal Holloway)

  • Davide Di Laurea

    (Department of Economics, University of Siena)

Abstract

We construct an overlapping-generations experiment to test for two alleged departures from Ricardian equivalence. In the first treatment the setting is close to the theoretical model, while in the second we allow for liquidity-constrained consumers. We then introduce uncertainty on future income for the first generation. Ricardian equivalence is well supported in the baseline experiment and to some extent in the liquidity-constraint case, whereas it is clearly rejected under uncertainty.

Suggested Citation

  • Roberto Ricciuti & Davide Di Laurea, 2003. "An experimental analysis of two departures from Ricardian equivalence," Economics Bulletin, AccessEcon, vol. 8(11), pages 1-11.
    • Handle: RePEc:ebl:ecbull:eb-03h30001
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    References listed on IDEAS

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    Cited by:

    1. Meissner, Thomas & Rostam-Afschar, Davud, 2017. "Learning Ricardian Equivalence," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 273-288.
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    3. John Duffy, 2008. "Macroeconomics: A Survey of Laboratory Research," Working Paper 334, Department of Economics, University of Pittsburgh, revised Jun 2014.
    4. Waqas, Muhamad & Awan, Masood Sarwar & Aslam, Muhammad Amir, 2011. "We are living on the cost of our children," MPRA Paper 32044, University Library of Munich, Germany.
    5. Ian P. Cassar & Kurt Davison & Christian Xuereb, 2018. "Does the Ricardian Equivalence Theorem Capture the Consumption Behavior of Maltese Households?," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(12), pages 1-77, December.
    6. Luigi Mittone & Matteo Tomaselli, 2019. "Economic Growth and Public Debt: An Experimental Approach in Search of a Confidence Channel," DEM Working Papers 2019/18, Department of Economics and Management.
    7. Roberto Tamborini & Matteo Tomaselli, 2020. "When does public debt impair economic growth? A literature review in search of a theory," DEM Working Papers 2020/7, Department of Economics and Management.
    8. Matthew DiGiuseppe & Patrick E. Shea, 2016. "Borrowed Time: Sovereign Finance, Regime Type, and Leader Survival," Economics and Politics, Wiley Blackwell, vol. 28(3), pages 342-367, November.
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    11. Artidiatun Adji & James Alm & Paul J. Ferraro, 2009. "Experimental tests of Ricardian equivalence with distortionary versus nondistortionary taxes," Economics Bulletin, AccessEcon, vol. 29(4), pages 2556-2572.

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    More about this item

    Keywords

    experiments;

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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