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	Ricardian Equivalence Theorem
		The Ricardian Equivalence Theorem essentially states that government deficits are anticipated by individuals who increase their saving because they realize that borrowing today has to be repaid later.
		Also, the implication of the Ricardian Equivalence Theorem is that interest rates and consumption will be unaffected by debt-financed government spending.
		Equivalently, the theorem implies all the income arising from the debt-financed government expenditure will be saved into the perfect hedge - the newly-issued government bonds themselves - so that consumption does not increase and thus the multiplier is killed off.
	www.econ.cuhk.edu.hk /~wcsuen/immortal/ricardian_equivalence_theorem.htm (196 words)

	Ricardian equivalence - Wikipedia, the free encyclopedia
		Ricardian equivalence, (also known as Barro-Ricardo equivalence proposition or Ricardian rent), is an economic theory which suggests that government budget deficits do not affect the total level of demand in an economy.
		Ricardian Equivalence suggests that government attempts to influence demand using fiscal policy will prove fruitless.
		Ricardian equivalence states that a deficit-financed increase in government spending will not lead to an increase in aggregate demand.
	en.wikipedia.org /wiki/Ricardian_equivalence (728 words)

	[No title]
		Ricardian equivalence theory has been criticised on three main grounds.
		Ricardian equivalence states that households, buoyed up by the anticipated decline in future taxation, will respond by spending more now.
		An indirect test of Ricardian equivalence is to check for a zero association between higher budget deficits and higher interest rates.
	www.tcd.ie /Economics/staff/dmcleese/Web/HW/CH15/BOX15-1.DOC (709 words)

	EFI - Publication Summary
		The issue of Ricardian equivalence is thus perhaps better viewed as a question concerning to what extent the equivalence hypothesis is a reasonable approximation of the real world.
		To formulate a test of Ricardian equivalence, it is however vital to extend the standard analysis in deterministic models to stochastic models.
		It is therefore necessary that an empirical study distinguishes between debt as a potential source of net wealth, which is the concern of the equivalence proposition, and debt's role as a signal of future levels of government consumption, which is due to the stochastic nature of the world.
	www2.hhs.se /EFI/summary/398.htm (1156 words)

	Ricardian equivalence, rational expectations, and the permanent income hypothesis. \| Accounting > Budget from ...
		Ricardian equivalence, rational expectations, and the permanent income hypothesis.
		The household sector treats the bonds issued to finance such a tax cut as equivalent to the present value of the implied increase in future tax liabilities.
		An answer to whether Ricardian equivalence is a good approximation to reality has to come from empirical studies.
	www.allbusiness.com /accounting/budget/117435-1.html (767 words)

	Bruce Bartlett Opinion Editorial: Are Budget Surpluses Equivalent To Tax Cuts?
		Ricardian equivalence is still controversial among economists, but it can be tested.
		Furthermore, Ricardian equivalence explains why taxpayers seem so lukewarm to the idea of a tax cut and why the notion of paying down the national debt is popular.
		And if there is any truth to Ricardian equivalence, they will continue to find their tax cut message falling on deaf ears as long as surpluses persist.
	www.ncpa.org /~ncpa/oped/bartlett/mar1099.html (619 words)

	[No title]
		3.Proponents of Ricardian equivalence argue that the relevant decisionmaking unit is the: A)individual.
		5.According to the theory of Ricardian equivalence, if consumers are forward-looking, they will view a tax cut that has no plans to reduce government spending as ______, so their consumption will ______.
		23.Proponents of Ricardian equivalence argue that if taxes are cut without cutting government spending and taxes are not expected to increase in the future until after an individual expects to be dead, then the individual will: A)spend all of the increase in income.
	www.cba.ua.edu /~jlee/macro/pr15.doc (1276 words)

	Equivalence economics / Economics - Economy-point.org
		Professor HC and former directors/conductors of the so-called "“institute for universal history"” in Bremen, and becomes today of Heinz Dieterich, professor for sociology to the Universidad Metropolitana (the "“independent mainurban in Mexico city, which designates concept "“of a not-free market, democratically the directly"” political economy determined which is based to the value theory by value-creating.
		I, P. With the equivalence economics it concerns thus theoretically on a description of the capitalistic free-market economy based a concept for a not-free market "“socialism 21.
		Economic equivalence exists between cash flows that have the same economic effect and could...
	www.economy-point.org /e/equivalence-economics.html (346 words)

	The Macroeconomic Impacts of Government Debt: An Empirical Analysis of the 1980s and 1990s
		According to the Ricardian equivalence hypothesis, because government debt is not viewed as private sector wealth, then an increase in government debt does not alter private spending.
		Most of these studies test Ricardian equivalence by estimating reduced-form equations where the interest rate is the dependent variable, and the list of regressors includes a measure of government debt or the deficit.
		However, this study is concerned with Ricardian equivalence, that is, with the impact of shocks to D on R, Y, and P.
	www.iaes.org /journal/aej/sept_99/wheeler/wheeler.htm (4582 words)

	econ7344-topic-5_1 (Site not responding. Last check: )
		While the early policy relevance of rational expectations to monetary economics has taken center stage in our study of macroeconomics during the 1970s, RE also generated some profound results in fiscal policy.
		Prominent among these was the concept of Ricardian equivalence, which states that the way a government finances its expenditure (i.e.
		Bernheim, B. Douglas (1987): "Ricardian Equivalence: An Evaluation of Theory and Evidence." NBER Macroeconomics Annual, 2, 263-303.
	www.fiu.edu /~thompsop/oldmacro/ricardian_equivalence.html (172 words)

	The Deficit Debates Again
		Equivalently, in a Keynesian framework, the REH implies all the income arising from the debt-financed government expenditure will be saved into the perfect hedge - the newly-issued government bonds themselves - so that consumption does not increase and thus the multiplier is killed off.
		The impact of the Ricardian Equivalence Hypothesis has been twofold: firstly, it has generated a lot of literature (particularly by the so-called New Keynesians) on themes which yield "anti-Ricardian" results.
		In a spectacular contrast, the "New Keynesians", self-declared inheritors of the Keynesian mantle, are in the meantime busily constructing arguments to disable Ricardian Equivalence and thus support their contention that not only do government deficits "crowd out" private investment, but the entire "buden-of-debt" rhetoric re-emerges.
	cepa.newschool.edu /het/essays/keynes/deficit.htm (3653 words)

	Stefan Karlsson's blog: No Ricardian Equivalence
		The implication for economic theory is, as Greg Mankiw points out, that Ricardian equivalence is again falsified.
		Consumers didn't seem to care very much that this extra income is only temporary and came at the price of a higher government budget deficit, and seems to have spent much of it.
		Ricardian equivalence rests on a number of assumptions which are false, such as a general belief that the government would have to pay back its debts or that interest rates are equal to general time preferences.
	stefanmikarlsson.blogspot.com /2008/06/no-ricardian-equivalence.html (230 words)

	Teacher's Corner: Does It Matter How You Pay for a State Dinner? A Lesson on Ricardian Equivalence: Library of ...
		During the course of that debate, Buchanan and others pointed out that while the fundamental insight of Ricardian equivalence is true, many of the assumptions that must be true for outcomes to be exactly the same are questionable in real world situations.
		As a result, determining the practical policy consequences of Ricardian equivalence boils down to an empirical issue, and it is possible that even if the equivalence of outcomes from tax finance and from debt finance does not strictly hold, the disparity between those outcomes is not a profound one.
		In any case, the fundamental insight Ricardo provided so long ago, that the choice of debt versus taxes is one of timing, remains valid—something to keep in mind when considering government finances and tax policy, whether you are reading the paper, watching the news, or ruling a country.
	www.econlib.org /library/Columns/Teachers/ricardianequiv.html (1512 words)

	Ricardian equivalence@Everything2.com
		Ricardian equivalence, named after economist David Ricardo, proposes that with regards to private spending, it does not matter when in time a government finances a given fixed spending programme.
		The tax cut is a fiscal expansion as the government borrows on good terms, then lends to the private sector at better terms than the capital market: the private sector is therefore better off and aggregate demand increases.
		These factors showing that the timing of government spending does affect the private sector demonstrate that Ricardian equivalence is too strong to hold in the real world.
	everything2.com /index.pl?node_id=1455310 (1110 words)

	Federal Reserve Bank of Minneapolis - The Region - Interview with Robert Barro - September 2005
		Region: The Ricardian equivalence hypothesis, which you brought to prominence in 1974, might be taken to suggest that deficit spending isn't inherently harmful since rational people, expecting to pay higher taxes in the future to pay off government debt, will save more, so private savings will balance out the public deficit.
		And is it puzzling to you that the Ricardian equivalence hypothesis isn't a mainstream belief in macroeconomics?
		Analysis often begins with Ricardian equivalence as a first-order proposition and then goes on to investigate why there are deviations from precise equivalence.
	woodrow.mpls.frb.fed.us /pubs/region/05-09/barro.cfm (7172 words)

	Reflections on Ricardian Equivalence
		The Ricardian equivalence proposition for public debt in my 1974 JPE paper is related to the discussions in Ricardo's Funding System, Smith's Wealth of Nations, and a number of treatments in macroeconomics from the 1950s to the 1970s.
		Useful extensions of the basic invariance proposition involve tax smoothing (in the context of distorting taxation) and the determinants of the maturity and other characteristics of the debt structure (in an environment of uncertainty).
		"Ricardian equivalence, expansionary fiscal contraction and the stock market: a VECM approach," Applied Economics, Taylor and Francis Journals, vol.
	ideas.repec.org /p/nbr/nberwo/5502.html (766 words)

	THE KOREA INTERNATIONAL ECONOMIC ASSOCIATION
		The Ricardian Hypothesis states that for a given level of government expenditure, aggregate demand is neutral to changes in the debt-to-tax ratio.
		Many economists argue that the private and government sectors have different planning horizons which will lead to deviations from Ricardian equivalence.
		In this paper, by using a model that nests both Ricardian equivalence and an alternative hypothesis, we empirically investigate whether the private sector has a shorter planning horizon than the government sector.
	www.uwm.edu /Dept/iej/Archive/vol10/no3/vol10_no3_paper2.htm (97 words)

	Economist's View: Minneapolis Fed Interview with Robert Barro
		Region: The Ricardian equivalence hypothesis, which you brought to prominence in 1974, might be taken to suggest that deficit spending isn't inherently harmful since rational people, expecting to pay higher taxes in the future to pay off government debt, will save more, so private savings will balance out the public deficit.
		The Ricardian proposition is about the consequences of paying for a given amount of public expenditure in different ways.
		This view moves the analysis away from pure Ricardian equivalence to the optimal tax perspective, which brings in the principle of tax smoothing.
	economistsview.typepad.com /economistsview/2005/11/minneapolis_fed.html (3759 words)

	Abstract: Carlos Fonseca MARINHEIRO - Ricardian Equivalence: an Empirical Application to the Portugese Economy
		It is the purpose of this paper to focus on the consequences of the Ricardian offset to the conduct of stabilising fiscal policies.
		If equivalence prevails there is no scope for effective stabilising fiscal policies.
		A review of the theoretical requirements of Ricardian equivalence reveals that they are not likely to be fulfilled in practice.
	www.econ.kuleuven.be /eng/ew/discussionpapers/Dps01/a0112.htm (118 words)

	[No title]
		Robert Barro of Harvard University (whom Landsburg mentions in passing on page 111) is the economist responsible for the modern rebirth of “Ricardian equivalence.” Briefly, “Ricardian equivalence” argues that while the size of government spending (G) is quite important and has major macroeconomic implications, the method of financing government spending is irrelevant.
		Public deficits and public borrowing mean higher taxes in the future, and that is equivalent to higher taxes today.
		Ricardians are a minority in the economics profession, but a fairly vocal and powerful one.
	faculty.oxy.edu /sslavov/csp/Handouts/Notes12_6.doc (593 words)

	Ricardian Equivalence - Research and Read Books, Journals, Articles at Questia Online Library
		In contrast, under Ricardian equivalence, interest in which was rekindled...papers...
		Ricardian equivalence with wage-rate uncertainty...have discovered many reasons why Ricardian equivalence may fail to hold.(1) Recently...being close to a "Keynesian"...
		It should be read and studied not just by specialists in fiscal policy but by all those in the economic and political community."--Robert Eisner, Journal of Economic Literature "Shaviro's history, economics, and political analysis are right on the mark.
	www.questia.com /library/economics-and-business/ricardian-equivalence.jsp (664 words)

	[No title]
		The main objective of the investigation is to test the empirical validity of the Ricardian Equivalence Proposition (REP) compared to the Conventional View in the context of a small developing economy.
		The investigation is one of a series of econometric tests developed to examine the empirical validity of the Ricardian Equivalence Proposition (REP) by opposition to the Conventional View in the Tunisian case.
		The Ricardian Equivalence Proposition By opposition to the Conventional View, the Ricardian Equivalence Proposition (REP) stipulates that budget and current account deficits are independent.
	www.ecomod.org /files/papers/1462.doc (7145 words)

	Economic Investigations: Devil's Advocate
		There is always going to be some Ricardian equivalence, since projections based on vulgar multipliers overestimate, but in a demand-constrained economy, I don’t expect intertemporal substitution (at full employment?) to be the story with which we stick.
		You have “some Ricardian equivalence” in that both extremes (Keynesian multiplier, classical ineffectiveness) are empirically implausible.
		You could also get “some” Ricardian equivalence if people’s planning horizons are long but not infinite.
	gabriel.mihalache.name /ei/article/270/devils-advocate (733 words)

	IREF - Ricardian Equivalence
		In the 19th century, David Ricardo (1772-1823) argued that the way the government finances the budget deficit does not affect the level of demand because it is just a question of "tax now" or "tax later".
		In this way, there is no difference between the public borrowing of today (associated with future taxes to finance this loan) and the taxes of today.
		"Experimental Tests of Ricardian Equivalence" by Charles Bram Cadsby and Murrayb Frank, Economic Inquiry, 1991, vol.
	www.irefeurope.org /en/Fiscal_Files/Ricardian_Equivalence.html (743 words)

	Why Bother to Quote Somebody Out-of-Context?: Archive Entry From Brad DeLong's Webjournal
		Measurement error in the proxies for expectations biases the estimated coefficients toward zero and, thus, toward the null hypothesis of Ricardian equivalence.
		A second problem with this approach as a test of Ricardian equivalence is that there is no natural metric for gauging the size of interest-rate effects.
		Indeed, this features was critical in assessing whether tests of Ricardian equivalence had any power against alternative descriptions of the world.
	www.j-bradford-delong.net /movable_type/archives/001470.html (1430 words)

	Fiscal Policy, by David N. Weil: The Concise Encyclopedia of Economics: Library of Economics and Liberty
		The extreme of this argument, known as Ricardian Equivalence, holds that tax cuts will have no effect on national saving, since changes in private saving will offset changes in government saving.
		But if consumers decide to spend some of the extra disposable income they receive from a tax cut (because they are myopic about future tax payments, for example), then Ricardian Equivalence will not hold; a tax cut will lower national saving and raise aggregate demand.
		The experience of the eighties, when private saving fell rather than rose in response to tax cuts, is evidence against Ricardian Equivalence.
	www.econlib.org /library/Enc/FiscalPolicy.html (2075 words)

	Economic Terminology Explained
		Hence, according to the RET, economic activity is neutral with respect to the mix of debt and taxes that the government uses to finance its expenditures.
		143, asserts that the Ricardian Equivalence Theorem is simply "a generalization of the Life Cycle-Permanent Income hypothesis (LCPIH)" in which the consumption-based LCPIH is extended to include government purchases, taxation, and debt.
		Cardia then applied a number of standard statistical tests to the simulated data and found that the tests were unable to distinguish the Ricardian economy from the non-Ricardian one.
	oldfraser.lexi.net /publications/forum/1998/february/terminology.html (1756 words)

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