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Fiscal Policy and Private Sector Saving Behavior: Tests of Ricardian Equivalence in Some Developing Economies

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  • International Monetary Fund

Abstract

Tax or debt financing of a given rate of government expenditures would, according to the now well-known Ricardian Equivalence proposition, have equivalent effects on aggregate demand. Among the reasons for a deviation from the equivalence is the possibility that the government and the private sector have different planning horizons. The paper finds no empirical support for differing planning horizons across sectors in a group of 16 developing economies and, therefore, provides empirical evidence for the equivalence hypothesis.

Suggested Citation

  • International Monetary Fund, 1987. "Fiscal Policy and Private Sector Saving Behavior: Tests of Ricardian Equivalence in Some Developing Economies," IMF Working Papers 1987/051, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1987/051
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    Cited by:

    1. 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.
    2. Catsambas, Thanos & Pigato, Miria, 1989. "The consistency of government deficits with macroeconomic adjustment : an application to Kenya and Ghana," Policy Research Working Paper Series 287, The World Bank.

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