Autor(es):
Afonso, António 
Data: 2008
Identificador Persistente: http://hdl.handle.net/10400.5/2347
Origem: Repositório da UTL
Assunto(s): debt neutrality; private consumption; EU; panel data
Detalhes do Documento
Euler testing Ricardo and Barro in the EU
Descrição
According to Keynesian economics wisdom, government debt has an effect on the economy since consumers see government debt as net wealth. However, according to the debt neutrality hypothesis of Ricardo (1817), popularised by Barro (1974), such effects would be absent. This paper's results, obtained from Euler equation estimations using a panel data approach, indicate that it would be wise to reject the debt neutrality hypothesis for the EU and that higher government indebtedness could actually deter private consumption.
According to Keynesian economics wisdom, government debt has an effect on the economy since consumers see government debt as net wealth. However, according to the debt neutrality hypothesis of Ricardo (1817), popularised by Barro (1974), such effects would be absent. This paper's results, obtained from Euler equation estimations using a panel data approach, indicate that it would be wise to reject the debt neutrality hypothesis for the EU and that higher government indebtedness could actually deter private consumption.
Tipo de Documento
Outro
Idioma Inglês
Idioma Inglês
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