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Ricardian Consumers With Non‐Keynesian (And Possibly Ricardian) Propensities

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  • James Pemberton

Abstract

Barsky, Mankiw and Zeldes (1986) have argued that uncertainty about future income can generate strong ‘Keynesian’ responses to tax changes by consumers who have far‐sighted ‘Ricardian’ preferences. The paper argues that this conclusion relies on an inappropriate treatment of future tax policies. Using a more appropriate framework generates behaviour which may instead be approximately Ricardian, and which, if it deviates from the Ricardian benchmark, usually does so in an anti‐Keynesian direction. If Keynesian behaviour is observed, therefore, it requires a different explanation.

Suggested Citation

  • James Pemberton, 2004. "Ricardian Consumers With Non‐Keynesian (And Possibly Ricardian) Propensities," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(1), pages 95-104, February.
    • Handle: RePEc:bla:scotjp:v:51:y:2004:i:1:p:95-104
    DOI: 10.1111/j.0036-9292.2004.05101006.x
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    References listed on IDEAS

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