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Ricardian Equivalence: An Empirical Application to the Portuguese Economy

Author

Listed:
  • Carlos Fonseca Marinheiro

    (K.U.Leuven, C.E.S. and University of Coimbra)

Abstract

It is the purpose of this paper to focus on the consequences of the Ricardian offset to the conduct of stabilising fiscal policies. If equivalence prevails there is no scope for effective stabilising fiscal policies. A review of the theoretical requirements of Ricardian equivalence reveals that they are not likely to be fulfilled in practice. However, the brief survey of the empirical applications shows that the published empirical evidence in inconclusive. An empirical application for the Portuguese economy is carried out. The tests are based on reduced-form consumption functions and on the Euler equation approach. The overall results are ambiguous.

Suggested Citation

  • Carlos Fonseca Marinheiro, "undated". "Ricardian Equivalence: An Empirical Application to the Portuguese Economy," International Economics Working Papers Series ces0112, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, International Economics.
    • Handle: RePEc:kul:kulwps:ces0112
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    File URL: http://www.econ.kuleuven.ac.be/ew/admin/Publications/Dps0112.pdf
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    Citations

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    Cited by:

    1. Algieri, Bernardina, 2013. "An empirical analysis of the nexus between external balance and government budget balance: The case of the GIIPS countries," Economic Systems, Elsevier, vol. 37(2), pages 233-253.
    2. Waqas, Muhammad & Awan, Masood Sarwar, 2011. "Are Pakistani Consumers Ricardian?," MPRA Paper 35375, University Library of Munich, Germany.
    3. Saima Sarwar, 2015. "Revisiting Ricardian Equivalence Hypothesis (REH) For Pakistan Using Money Demand Function Approach," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 4(3), pages 154-166.
    4. Ergin Akalpler, 2023. "Triggering economic growth to ensure financial stability: case study of Northern Cyprus," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-40, December.
    5. 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.
    6. Cosimo Magazzino, 2012. "Fiscal Policy, Consumption and Current Account in the European Countries," Economics Bulletin, AccessEcon, vol. 32(2), pages 1330-1344.
    7. International Monetary Fund, 2005. "Norway: Selected Issues," IMF Staff Country Reports 2005/197, International Monetary Fund.
    8. Tomas Wroblowsky, 2007. "Explaining the Variability of Debt Neutrality Tests Results: A Meta-Analysis of Ricardian Equivalence," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 5(1), pages 7-24.
    9. Francesco Forte & Cosimo Magazzino, 2015. "Ricardian equivalence and twin deficits hypotheses in the euro area," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 17(2), pages 148-166, October.
    10. Shankar Prasad Acharya, 2009. "Verification of Causality through VAR and Intervention Analysis: Econometric Modeling on Budget Deficit and Trade Deficit in Nepal," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 21, pages 1-30, April.
    11. Muhammad Waqas & Masood Sarwar Awan, 2012. "Exchange Rate, Interest Rate and Ricardian Equivalence Evidence from Pakistan," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 0(SS), pages 249-269.

    More about this item

    Keywords

    Ricardian equivalence; Portugal; fiscal policy;
    All these keywords.

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