We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Does the Ricardian Equivalence Proposition Hold in SAARC Countries?
- Authors
Hameed, Muhammad Reehan; Ahmed, Shabbir; Salman, Aneel
- Abstract
The current study explored the cogency of the Ricardian Equivalence Hypothesis (REH) in SAARC. For it, 29 years, time-series data from 1990 to 2018 have been used1. The Fixed effect model and Panel cointegration tests have been applied to consider the affiliation among the regressors. The fallouts of the study indicate that government debt and private consumption have a long-run cointegrated liaison with each other. The outcomes of the study reject the certainty of Ricardian equivalence in SAARC. Along with an upturn in government debt, private consumption increases and people do not postpone current consumption despite increasing government debt and expected taxes, which can be levied in future to repay the debt obligations. In addition, real GDP and Real government expenditure stimulate while real tax revenue discourages private consumption. The study also found two way causality between government debt and private consumption. The results also imply that fiscal policy is adequate to stabilize the economy.
- Subjects
RICARDIAN equivalence theorem; PUBLIC debts; GROSS domestic product
- Publication
Pakistan Journal of Social Sciences (PJSS), 2020, Vol 40, Issue 4, p1495
- ISSN
2074-2061
- Publication type
Article