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Spotřební funkce a princip Ricardovské ekvivalence v malé otevřené ekonomice
[The consumption function and Ricardian equivalence in a small open economy]

Author

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  • Martin Mandel
  • Vladimír Tomšík

Abstract

The paper provides a comprehensive survey of the theories of consumption functions. The Keynesian consumption function is examined in more detail under a condition of a small open economy. The paper explains the variety of consumption expenditures in the Czech Republic between 1993 - 2001. In this paper an enlarged version of the Czech consumption function, also tests Ricardian equivalence. Empirical results imply that consumer behaviour reacts rationally to an external imbalance and the economy heads to equilibrium by itself. However, the consumption reaction seems to be irrational under an internal balance. Consumers do not voluntarily reduce their consumption when deficit of public finance appears but they are forced to do so when interest rates increase as a result of the internal imbalance.

Suggested Citation

  • Martin Mandel & Vladimír Tomšík, 2003. "Spotřební funkce a princip Ricardovské ekvivalence v malé otevřené ekonomice [The consumption function and Ricardian equivalence in a small open economy]," Politická ekonomie, Prague University of Economics and Business, vol. 2003(4), pages 517-532.
    • Handle: RePEc:prg:jnlpol:v:2003:y:2003:i:4:id:414
    DOI: 10.18267/j.polek.414
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    References listed on IDEAS

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    1. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    2. Simon Kuznets, 1946. "Introduction, National Income: A Summary of Findings," NBER Chapters, in: National Income: A Summary of Findings, pages 1-2, National Bureau of Economic Research, Inc.
    3. Modigliani, Franco, 1986. "Life Cycle, Individual Thrift, and the Wealth of Nations," American Economic Review, American Economic Association, vol. 76(3), pages 297-313, June.
    4. Simon Kuznets, 1946. "National Income: A Summary of Findings," NBER Books, National Bureau of Economic Research, Inc, number kuzn46-2, July.
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    Cited by:

    1. Milan Palát & Alois Kunc, 2011. "Assessing the GDP structure in global comparison," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 59(2), pages 213-220.

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    More about this item

    Keywords

    monetary policy; convergence; fiscal policy; consumption; Ricardian equivalence; terms of trades; balance of income;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F15 - International Economics - - Trade - - - Economic Integration
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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