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An experimental analysis of two departures from Ricardian equivalence

Author

Listed:
  • Roberto Ricciuti

    (Departiment of Economics, Royal Holloway)

  • Davide Di Laurea

    (Department of Economics, University of Siena)

Abstract

We construct an overlapping-generations experiment to test for two alleged departures from Ricardian equivalence. In the first treatment the setting is close to the theoretical model, while in the second we allow for liquidity-constrained consumers. We then introduce uncertainty on future income for the first generation. Ricardian equivalence is well supported in the baseline experiment and to some extent in the liquidity-constraint case, whereas it is clearly rejected under uncertainty.

Suggested Citation

  • Roberto Ricciuti & Davide Di Laurea, 2003. "An experimental analysis of two departures from Ricardian equivalence," Economics Bulletin, AccessEcon, vol. 8(11), pages 1-11.
    • Handle: RePEc:ebl:ecbull:eb-03h30001
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    References listed on IDEAS

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    Cited by:

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    4. Waqas, Muhamad & Awan, Masood Sarwar & Aslam, Muhammad Amir, 2011. "We are living on the cost of our children," MPRA Paper 32044, University Library of Munich, Germany.
    5. Ian P. Cassar & Kurt Davison & Christian Xuereb, 2018. "Does the Ricardian Equivalence Theorem Capture the Consumption Behavior of Maltese Households?," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(12), pages 1-77, December.
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    8. Geiger, Martin & Luhan, Wolfgang J. & Scharler, Johann, 2016. "When do fiscal consolidations lead to consumption booms? Lessons from a laboratory experiment," Journal of Economic Dynamics and Control, Elsevier, vol. 69(C), pages 1-20.
    9. John Duffy, 2008. "Macroeconomics: A Survey of Laboratory Research," Working Paper 334, Department of Economics, University of Pittsburgh, revised Jun 2014.
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    More about this item

    Keywords

    experiments;

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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