Is the Ricardian Equivalence Proposition an 'Aerie Fairy' Theory for Europe?
Using a theoretical model based on dynamic optimizing agents, we test empirically the Ricardian equivalence proposition (REP) for the EU-15 countries. The theoretical setting allows us to obtain estimates of the structural parameters of the model and to test directly the hypothesis implied by the REP. Using recently developed end-of-sample cointegration breakdown tests, we find evidence of a change in the fiscal behaviour of individuals during the last decade-after the introduction of a fiscal rule, namely the Maastricht criteria-for most countries in the sample. The results concerning the direction of change are mixed. Copyright (c) The London School of Economics and Political Science 2007.
Year of publication: |
2007
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Authors: | CUARESMA, JESUS CRESPO ; REITSCHULER, GERHARD |
Published in: |
Economica. - London School of Economics (LSE). - Vol. 74.2007, 296, p. 682-694
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Publisher: |
London School of Economics (LSE) |
Saved in:
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