Ghassan, Hassan B. (): Test de l’équivalence Ricardienne par la Modélisation SVAR. Published in: Revue de l’Institut National de. Emmanuel Thibault, “L’Equivalence Ricardienne dans les Modèles de Croissance avec Accumulation du Capital”, Revue d’Économie Politique, vol. , hypotheses of rational expectations and Ricardian equivalence can not be anticipations rationnelles et de l’equivalence ricardienne n’est pas rejetee par les .
|Published (Last):||27 July 2006|
|PDF File Size:||2.73 Mb|
|ePub File Size:||14.80 Mb|
|Price:||Free* [*Free Regsitration Required]|
If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form. Some methodological issues Knowledge obtained from testing the effects on consumption of varying degrees of public indebtedness for a single ricagdienne or for a small equivalwnce of countries equivakence be as much reliable as information which can be secured from observing consumer behaviour in a large sample of countries.
On the other hand, highlighting the controversy between the traditional view and the equivalence theory over fiscal policy effectiveness in a global setting is usually constrained by the availability of time-series data ; that is, only a few observations are ricardiennne over time, but a great many observations are available for different countries at a point in time. David Ricardo was the first to propose this possibility in the early nineteenth century; however, he was unconvinced of its empirical relevance.
Thus individuals, further to economizing on tax cuts, proceed to curtail their present consumption expenditure in order to be able to meet the tax liabilities out of the continuously growing stock of debt.
L&#;EQUVALENCE RICARDIENNE by asma Guezguez on Prezi
Even though a world- wide diffusion of the effects of country-specific economic policies through external trade cannot be seriously doubted, the present Equivalencce model is quite naive to capture the complicated set of these intricate inter- country relationships. General contact details of provider: The choice is therefore “tax now or tax later. After dropping these coefficients and the cross products of AlriT, AlnAD, Z and Z’ from the last relationship, the following equation is derived.
Economics Letters 69, In formulating the equovalence dis utility function 2the government is assumed to impose two sorts of burden on households, with a view to ricradienne public expenditure programmes: You can help by adding to it.
The effects of debt financing on private consumption and savings have been a recurrent and mostly controversial topic in macroeconomic analysis for a long time. We avoid imposing formal short run equiavlence long run constraints, because this may overestimate the compensation rate and rlcardienne the estimation of structural multipliers.
In addition to the author , Nicoletti’s  empirical analysis of the tax-discounting hypothesis, in the context of a cross-country sample of eight OECD countries, has revealed that the estimates of the tax-discounting parameter are non-zero for half of the countries considered the U. This supports the interpretation that the large budget deficit, financed especially by debt, has been a very important factor behind the significant increase in real interest rates.
As a result, they will save, rather than spend, the extra disposable income from the initial tax cut, leaving demand and output unchanged.
Test de l’équivalence Ricardienne par la Modélisation SVAR
Ricardian equivalence requires assumptions that have been seriously challenged. So countercyclical fiscal policy can be effective if any one of the conditions necessary for the equivalence does not hold.
Thus the equivalence theorem should not be separated from the assumptions on which it is based. Indeed, the values of these coefficients convey the message that simply saving the amounts out of tax reductions to pay for future taxes is not considered to be sufficient to cope with the expected deterioration in income levels.
The cornerstone assumption of the equivalence theorem is that the future tax implications of current government outlays are fully recognized by the private sector complete tax discountingso that the coefficient on tax revenue should be insignificantly different from zero. Ricqrdienne urged active countercyclical efforts of fiscal policy and these efforts are not predestined to fail not even in the new classical theory, only the conditions necessary for the efficiency of countercyclical efforts were specified by new classicals.
Liste des illustrations Rivardienne 1. 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. The Ricardian equivalence proposition also known as the Ricardo—de Viti—Barro equivalence theorem  is an economic hypothesis holding that consumers are forward ircardienne and so internalize the government’s budget constraint when making ricrdienne consumption decisions.
Please note that corrections may take a couple of weeks to filter through the various RePEc services. In this story, if these processes can be changed by the government, or, in any way, the additional income can be believed not to be withdrawn later, the initial tax cut will induce a rise in public consumption expenditures. Equvalence such periods, consumers have a rifardienne incentive to view tax cuts as merely replacing current taxes with future taxes of equal present value, as a result of the unfavourable prospects concerning their future living standards ; the unfavourable prospects reinforce their precautionary motive for saving as a hedge against the anticipated deterioration in economic conditions.
The first procedural step to the classification process is to determine whether the sample countries can be grouped together on the basis of common debt ricaridenne.
Corrections All material on this site has been provided by the respective publishers and authors. A transformed variable is defined as the original variable minus the country and time means plus the total mean.
On the contrary, a switch from taxes to debt is shown to reduce consumption in debt-ridden countries, thus lending support to the equivalence proposition. Test of crowding-out effect by bootstrapping. Seater, John J, The FPE is equivalebce calculated for each lag, and the lag length that minimizes the FPE is chosen as the lag order for each selected variable. In this respect, Ricardian equivalence equivlaence the exact conditions necessary for countercyclical fiscal policies.
Controlling the real economy is possible perhaps even in a Keynesian style if government regains its potential to exert this control. Nevertheless, he argued that “it is much less clear that this complication would imply systematic errors in a direction such that public debt issue raises aggregate demand. On the contrary, consumers in debt-ridden countries do not appear to suffer from debt illusion: Estimation of Euler equations for the consumer’s stochastic dynamic optimization problem provided evidence that can be summarized equvalence follows:.
Even less conclusive is the reaction pattern of households with respect to changes in the tax burden. Download full text from publisher File URL: The results are also presented in Table 1, where debt-ridden solvent, intermediate countries are shown to be divided into high-income and low-income countries.
In order to exploit the full power of the time-series, cross-section data, we employed the between-within groups fixed- effects estimator. InBarro offered a number of defenses against various other critiques. Our purpose is to find out whether consumption in sensitivity is best approximated by a Ricardian regime, where fiscal policy is inefficient in steering demand or, instead, by a Keynesian regime, where fiscal policy plays a dominant role.
The public expenditures and private investment: Accordingly, these agents may be claimed to be in a state of debt illusion ; that is, a tax cut coupled with a bond issue will probably stimulate consumer spending, in conformity with the traditional view of fiscal policy potency1.
Ricardian equivalence – Wikipedia
As Feldstein , Reid , Blanchard, Modigliani equivaldnce, Feldstein and Elmendorf  and Modigliani and Sterling  contend, replacing current taxes with debt causes consumers to feel wealthier, as a result of the increase in their bond holdings, and hence to increase their consumption. However, Ricardo himself was skeptical of this equivalence. Before Table 2 is examined in detail, it is equivaelnce emphasizing the high values of the adjusted R’s and the low values of the Ljung-Box statistics, suggesting that the residuals are serially uncorrelated.
Brookings Papers on Economic Activity. Our results suggest that the REH applies to Moroccan economy, since private saving compensates a big fraction i. The FPE is then computed for each lag, and the lag length that minimizes the FPE is selected as the order of riczrdienne own lag for consumption.
Sorting out the sample countries according to the debt ratio is a prerequisite for assessing the effects on private spending of the level of indebtedness.