Ricardian Consumers With Non-Keynesian (And Possibly Ricardian) Propensities

<link rid="b3">Barsky, Mankiw and Zeldes (1986)</link> have argued that uncertainty about future income can generate strong 'Keynesian' responses to tax changes by consumers who have far-sighted 'Ricardian' preferences. The paper argues that this conclusion relies on an inappropriate treatment of future tax policies. Using a more appropriate framework generates behaviour which may instead be approximately Ricardian, and which, if it deviates from the Ricardian benchmark, usually does so in an anti-Keynesian direction. If Keynesian behaviour is observed, therefore, it requires a different explanation. Copyright (c) Scottish Economic Society 2004.