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Are Pakistani Consumers Ricardian?

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  • Waqas, Muhammad
  • Awan, Masood Sarwar

Abstract

The purpose of this study is to check the Ricardian Equivalence Hypothesis in case of Pakistan by using annual data for the period of 1973-2009. Government expenditure, private consumption expenditure, tax revenue, government debt, disposable income, government budget deficit and wealth are the variables which are used for analysis. Cointegration results show a long run relationship among the variables. Results of structural form consumption function invalidate the Ricardian Equivalence Hypothesis in case of Pakistan. These results draw attention towards the significance of fiscal policies in boosting private consumption and controlling budget deficits, which are the prime goals of stabilization policies in Pakistan.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 35375.

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Date of creation: 2011
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Publication status: Published in Economics and Business Review 2011.13(2011): pp. 161-177
Handle: RePEc:pra:mprapa:35375

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Keywords: Fiscal policy; Ricardian Equivalence; Government debt; Pakistan;

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