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An experimental analysis of two departures from Ricardian equivalence

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Author Info
Roberto Ricciuti () (Departiment of Economics, Royal Holloway)
Davide Di Laurea () (Department of Economics, University of Siena)

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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.

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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 8 (2003)
Issue (Month): 11 ()
Pages: 1-11
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:8:y:2003:i:11:p:1-11

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Related research
Keywords: experiments; liquidity constraints.; overlapping generations; Ricardian equivalence; uncertainty;

Find related papers by JEL classification:
H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
C9 - Mathematical and Quantitative Methods - - Design of Experiments

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Barsky, Robert B & Mankiw, N Gregory & Zeldes, Stephen P, 1986. "Ricardian Consumers with Keynesian Propensities," American Economic Review, American Economic Association, vol. 76(4), pages 676-91, September. [Downloadable!] (restricted)
    Other versions:
  2. Strawczynski, Michel, 1995. "Income Uncertainty and Ricardian Equivalence," American Economic Review, American Economic Association, vol. 85(4), pages 964-67, September. [Downloadable!] (restricted)
  3. Heller, Walter Perrin & Starr, Ross M, 1979. "Capital Market Imperfection, the Consumption Function, and the Effectiveness of Fiscal Policy," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 455-63, August. [Downloadable!] (restricted)
  4. R. Glenn Hubbard & Kenneth L. Judd, 1986. "Liquidity Constraints, Fiscal Policy, and Consumption," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(1986-1), pages 1-60. [Downloadable!]
  5. B. Douglas Bernheim, 1987. "Ricardian Equivalence: An Evaluation of Theory and Evidence," NBER Chapters, in: NBER Macroeconomics Annual 1987, Volume 2, pages 263-316 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  6. Marimon, Ramon & Sunder, Shyam, 1993. "Indeterminacy of Equilibria in a Hyperinflationary World: Experimental Evidence," Econometrica, Econometric Society, vol. 61(5), pages 1073-107, September. [Downloadable!] (restricted)
    Other versions:
  7. Chan, Louis Kuo Chi, 1983. "Uncertainty and the neutrality of government financing policy," Journal of Monetary Economics, Elsevier, vol. 11(3), pages 351-372. [Downloadable!] (restricted)
  8. Cadsby, Charles Bram & Frank, Murray, 1991. "Experimental Tests of Ricardian Equivalence," Economic Inquiry, Oxford University Press, vol. 29(4), pages 645-64, October.
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  9. Seater, John J, 1993. "Ricardian Equivalence," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 142-90, March. [Downloadable!] (restricted)
  10. Martin Feldstein, 1988. "The Effects of Fiscal Policies When Incomes are Uncertain: A Contradiction to Ricardian Equivalence," NBER Working Papers 2062, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. John Duffy, 2008. "Macroeconomics: A Survey of Laboratory Research," Working Papers 334, University of Pittsburgh, Department of Economics, revised Mar 2008. [Downloadable!]
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