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Did Smith Address Ricardian Equivalence before Ricardo?

Author

Listed:
  • David R. Hakes

    (University of Northern Iowa)

  • Ken McCormick

    (University of Northern Iowa)

Abstract

Although Ricardo may be the first to give a numerical demonstration of debt neutrality, we argue that he is not the first to explore the concept. In particular, we contend that Adam Smith presents many of the same arguments as Ricardo. Moreover, Smith frames the equivalence issue in the same manner as modern scholars. That is, Smith asks whether government bonds are net wealth, or, alternatively, are tax rebates saved. In addition, Smith shares Ricardo's concern about the possibility of fiscal illusion.

Suggested Citation

  • David R. Hakes & Ken McCormick, 1996. "Did Smith Address Ricardian Equivalence before Ricardo?," Eastern Economic Journal, Eastern Economic Association, vol. 22(1), pages 57-61, Winter.
    • Handle: RePEc:eej:eeconj:v:22:y:1996:i:1:p:57-61
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume22/V22N1P57_61.pdf
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    Cited by:

    1. Robert J. Barro, 1996. "Reflections on Ricardian Equivalence," NBER Working Papers 5502, National Bureau of Economic Research, Inc.
    2. Daniel Ştefan BELINGHER, 2016. "A Three-Dimensional Approach On The Ricardian Equivalence In Romania," Romanian Economic Business Review, Romanian-American University, vol. 11(2), pages 112-122, June.

    More about this item

    Keywords

    Ricardian;

    JEL classification:

    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)

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