IDEAS home Printed from https://ideas.repec.org/a/eej/eeconj/v21y1995i1p57-66.html
   My bibliography  Save this article

Deficits and Interest Rates as Evidence of Ricardian Equivalence

Author

Listed:
  • David C. Rose

    (University of Missouri, St. Louis)

  • David R. Hakes

    (University of Northern Iowa)

Abstract

A number of empirical studies have failed to find a significant relationship between deficits and interest rates. This "non-finding" has become something of a stylized fact among many economists and is often cited as evidence of the validity of the Ricardian equivalence theorem. In this paper we show that estimates of reduced-form interest rate equations do not provide direct information about structural parameters that might reveal Ricardian equivalence. As a result, an insignificant relationship between deficits and interest rates is only a necessary, not a sufficient, condition for Ricardian equivalence.

Suggested Citation

  • David C. Rose & David R. Hakes, 1995. "Deficits and Interest Rates as Evidence of Ricardian Equivalence," Eastern Economic Journal, Eastern Economic Association, vol. 21(1), pages 57-66, Winter.
    • Handle: RePEc:eej:eeconj:v:21:y:1995:i:1:p:57-66
    as

    Download full text from publisher

    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume21/V21N1P57_66.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. António Afonso, 2007. "An Avenue for Expansionary Fiscal Contractions," The IUP Journal of Public Finance, IUP Publications, vol. 0(3), pages 7-15, August.
    2. António Afonso, 2001. "Non-Keynesian Effects of Fiscal Policy in the EU-15," Working Papers Department of Economics 2001/07, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    3. Carlos Vieira, 2004. "The Deficit?Interest Rate Connection: an empirical assessment of the EU," Economics Working Papers 5_2004, University of Évora, Department of Economics (Portugal).
    4. Ant Afonso & Christophe Rault, 2015. "Short- and long-run behaviour of long-term sovereign bond yields," Applied Economics, Taylor & Francis Journals, vol. 47(37), pages 3971-3993, August.
    5. António Afonso, 2001. "Government indebtedness and european consumers behaviour," Working Papers Department of Economics 2001/12, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    6. William Gissy, 1999. "Net treasury borrowing and interest-rate changes," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 23(1), pages 23-29, March.
    7. Daniel BELINGHER, 2015. "A PVAR MODEL BUILT ON THE RICARDIAN APPROACH TO DEFICITS IN CENTRAL AND EASTERN EUROPE Abstract : In the current times, the issue of the deficits became very problematic for the economists, as well as," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 4(Special I), pages 1-41, august.
    8. Tomas Wroblowsky, 2007. "Explaining the Variability of Debt Neutrality Tests Results: A Meta-Analysis of Ricardian Equivalence," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 5(1), pages 7-24.
    9. Jaka Sriyana, 2010. "Multi period shocks roles on government spending in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 2(3), pages 251-264, April.
    10. Tuan Van Nguyen, 2013. "Do Budget Deficits Affect Real Interest Rates? A Test of Ricardian Equivalence Theorem," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 5(5), pages 86-102, October.

    More about this item

    Keywords

    Deficit; Ricardian Equivalence;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eej:eeconj:v:21:y:1995:i:1:p:57-66. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    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. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Victor Matheson, College of the Holy Cross (email available below). General contact details of provider: https://edirc.repec.org/data/eeaa1ea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.