IDEAS home Printed from https://ideas.repec.org/p/isu/genstf/198710010700001178.html
   My bibliography  Save this paper

Government debt, Consumption, and Interest Rates: An Empirical Study of the Ricardian Equivalence Hypothesis

Author

Listed:
  • Lee, Bong-Soo

Abstract

This paper investigates the effects of the government debt on private consumption and interest rates (i.e., the Ricardian equivalence hypothesis) in a nonlinear-quadratic equilibrium framework, combined with a time series analysis of the data. The model is summarized by the restrictions on the coefficients of a vector auto regressive (VAR) representation of the relevant variables. The model is not rejected for the sample period of 1947 through 1979 even though the evidence was not overwhelming. It is rejected when the sample period is. extended, to... include, the. Reagan .administration .period up to 1987,1. A more detailed data analysis based on a VAR implies, however',- that the rejection of the model does not necessarily imply rejection of the equivalence hypothesis for recent years and that the Ricardian equivalence hypothesis still provides a plausible approximation of reality.

Suggested Citation

  • Lee, Bong-Soo, 1987. "Government debt, Consumption, and Interest Rates: An Empirical Study of the Ricardian Equivalence Hypothesis," ISU General Staff Papers 198710010700001178, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:198710010700001178
    as

    Download full text from publisher

    File URL: https://dr.lib.iastate.edu/server/api/core/bitstreams/eabb8c9b-364c-4849-8633-150d939ca5db/content
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isu:genstf:198710010700001178. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.