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The Ricardian equivalence: A theoretical curiosity? Some indications for the Venezuelan case (1950-2010)

Author

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  • Bladimir David Pozo Sulbarán

    (Departamento de Estudios y Estadísticas Económicas (DEEE) del Banco Central de Venezuela (BCV), Subsede Maracaibo. Dirección postal 4001.)

Abstract

This paper tries to extract certain indications about the validity of the ricardian equivalence as an approximation of the real performance of the Venezuelan economy based on the close relationship with the permanent income hypothesis. Using data for the period 1950-2010 and Koyck rationalized model (1954), specifically, the model of adaptive expectations (Greene, 1999) and some variants, several regression models were estimated. Empirical evidence suggests that the permanent income hypothesis does not seem to be a good approximation for consumption in Venezuela. Finally, it is very likely that the thesis of the ricardian equivalence is not a good approximation for the real behavior of the economy.

Suggested Citation

  • Bladimir David Pozo Sulbarán, 2013. "The Ricardian equivalence: A theoretical curiosity? Some indications for the Venezuelan case (1950-2010)," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 38(35), pages 101-125, January-J.
    • Handle: RePEc:ula:econom:v:38:y:2013:i:35:p:101-125
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    References listed on IDEAS

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    1. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    2. Bárcenas, Luis Arturo. & Chirinos, Ana María. & Pagliacci, Carolina., 2013. "Trasmisión de choques macroeconómicos en Venezuela. Un enfoque estructural del modelo factorial," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(320), pages 903-942, octubre-d.
    3. David Cass, 1965. "Optimum Growth in an Aggregative Model of Capital Accumulation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(3), pages 233-240.
    4. Gustavo García Osío & Rafael Rodríguez-Balza & Luis Marcano & Ricardo Penfold & Gustavo Sánchez, 1998. "La sostenibilidad de la política fiscal en Venezuela," IDB Publications (Working Papers) 7573, Inter-American Development Bank.
    5. García Osío, Gustavo & Rodríguez-Balza, Rafael & Marcano, Luis & Penfold, Ricardo & Sánchez, Gustavo, 1997. "La sostenibilidad de la política fiscal en Venezuela," IDB Publications (Working Papers) 6105, Inter-American Development Bank.
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    Cited by:

    1. Artidiatun Adji & James Alm, 2016. "Testing for Ricardian Equivalence in Indonesia," Working Papers 1616, Tulane University, Department of Economics.

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    More about this item

    Keywords

    Ricardian equivalence; permanent income hypothesis; Koyck Model.;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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