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Fiscal policy and the Ricardian equivalence: Empirical evidence from Morocco

Author

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  • Mouna MARZOUK

    (Mohammed V University of Rabat, Faculty of Economics & Law, Applied Economics Lab., Morocco.)

  • Youssef OUKHALLOU

    (Mohammed V University of Rabat, Faculty of Economics & Law, Applied Economics Lab., Morocco.)

Abstract

This paper empirically investigates the validity of the Ricardian equivalence hypothesis in Morocco, based on recent data (1980-2016) that encompasses interesting episodes of demand-oriented expansionary government policy during the second half of the 2000s, followed by significant restrictive fiscal measures starting from 2012. We use the SVAR methodology, which enables us to make the difference between the dynamics of savings and the budget deficit by separating them into two types of shocks. Our results suggest that the equivalence is verified in the Moroccan macroeconomic framework. The paper concludes that national savings offset up to 76% of fiscal deficit shocks.

Suggested Citation

  • Mouna MARZOUK & Youssef OUKHALLOU, 2017. "Fiscal policy and the Ricardian equivalence: Empirical evidence from Morocco," Journal of Economics Library, EconSciences Journals, vol. 4(3), pages 372-381, September.
    • Handle: RePEc:cvv:journ5:v:4:y:2017:i:3:p:372-381
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    Keywords

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    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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