The (In)Validity of the Ricardian Equivalence Theorem—Findings from a Representative German Population Survey

The (In)Validity of the Ricardian Equivalence Theorem—Findings from a Representative German Population Survey

In this paper, we utilise data from a German population survey to test the validity of the Ricardian equivalence theorem (RET). In 2013, 2,000 representatively chosen people were asked whether they have altered their consumption and saving behaviour in response to the significant increase in public...

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Udgivet i:MAGKS - Joint Discussion Paper Series in Economics (Band 11-2016)
Autoren: Hayo, Bernd, Neumeier, Florian
Format: Artikel
Sprog:engelsk
Udgivet: Philipps-Universität Marburg 2016
Fag:
Ricardian equivalence
private saving
survey; Germany.
public debt
Wirtschaft
private consumption
Economics
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Summary:In this paper, we utilise data from a German population survey to test the validity of the Ricardian equivalence theorem (RET). In 2013, 2,000 representatively chosen people were asked whether they have altered their consumption and saving behaviour in response to the significant increase in public debt that occurred between 2008 and 2012. Our findings suggest that, in general, RET does not hold. Only 7% of our respondents state that they consume a smaller proportion of their income and save a larger proportion in response to public debt accumulation. Moreover, using multinominal logit regressions, we find that individuals’ consumption responses are significantly related to their economic situation, time preferences, education, and age.
Fysisk beskrivelse:23 Seiten
ISSN:1867-3678
DOI:10.17192/es2024.0491

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