We analyse Ricardian Equivalence in open economy using a panel of 18 developed countries for 1973-1998. We use a dynamic panel estimated via instrumental variables and we discuss why this specification should be preferred to a static model estimated via ordinary least squares. We find a significant effect of the budget balance on the current account, suggesting that Ricardian Equivalence does not hold.
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Volume (Year): 96 (2006) Issue (Month): 3 (May-June) Pages: 309-324 Download reference. The following formats are available: HTML
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