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Are agents Ricardian? Evidence from the CBC survey

Author

Listed:
  • Nektarios Michail

    (Central Bank of Cyprus)

  • Theodosis Kallenos

    (Central Bank of Cyprus)

  • Ioanna Evangelou

    (Cyprus University of Technology)

Abstract

This paper provides survey estimates on whether economic agents show Ricardian-like behaviour, via providing the yes/no answers to the question "If there is a permanent increase in the level of government spending, we can expect an increase in taxation", in a survey conducted by the Central Bank of Cyprus in 2018. The findings suggest that only 12% of the respondents do not expect an increase in taxation, classifying them as non-Ricardian. Around 85% of the respondents expect an increase in taxation following an increase in government spending, suggesting that they display some degree of forward-looking behaviour. The finding holds important implications for fiscal policy and provides another potential explanation on why fiscal multipliers tend to be less than unity.

Suggested Citation

  • Nektarios Michail & Theodosis Kallenos & Ioanna Evangelou, 2024. "Are agents Ricardian? Evidence from the CBC survey," Economics Bulletin, AccessEcon, vol. 44(3), pages 1147-1152.
    • Handle: RePEc:ebl:ecbull:eb-24-00313
    as

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    References listed on IDEAS

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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