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Are Pakistani Consumers Ricardian?

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  • Waqas, Muhammad
  • Awan, Masood Sarwar

Abstract

The purpose of this study is to check the Ricardian Equivalence Hypothesis in case of Pakistan by using annual data for the period of 1973-2009. Government expenditure, private consumption expenditure, tax revenue, government debt, disposable income, government budget deficit and wealth are the variables which are used for analysis. Cointegration results show a long run relationship among the variables. Results of structural form consumption function invalidate the Ricardian Equivalence Hypothesis in case of Pakistan. These results draw attention towards the significance of fiscal policies in boosting private consumption and controlling budget deficits, which are the prime goals of stabilization policies in Pakistan.

Suggested Citation

  • Waqas, Muhammad & Awan, Masood Sarwar, 2011. "Are Pakistani Consumers Ricardian?," MPRA Paper 35375, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35375
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Fiscal policy; Ricardian Equivalence; Government debt; Pakistan;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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