Government Debt, Life-Cycle Income and Liquidity Constraints: Beyond Approximate Ricardian Equivalence

1996 ◽  
Author(s):  
Hamid Faruqee ◽  
Douglas Laxton ◽  
Steven Symansky
Keyword(s):  
Life Cycle ◽  
Liquidity Constraints ◽  
Government Debt ◽  
Ricardian Equivalence

Government Debt, Life-Cycle Income and Liquidity Constrains: Beyond Approximate Ricardian Equivalence

1996 ◽  
Vol 96 (140) ◽  
pp. 1
Author(s):  
Steven Symansky ◽  
Douglas Laxton ◽  
Hamid Faruqee ◽  
◽  
◽  
...  
Keyword(s):  
Life Cycle ◽  
Government Debt ◽  
Ricardian Equivalence

How Do Aging and Government Debt Level Affect the Ricardian Equivalence Hypothesis?

2016 ◽  
Vol 12 (3) ◽  
pp. 165-183
Author(s):  
Ji-Young Jang ◽  
◽  
Chang-Soo Kim ◽  
Keyword(s):  
Government Debt ◽  
Ricardian Equivalence ◽  
Debt Level

scholarly journals Testing the Ricardian equivalence hypothesis in the case of Ethiopia: An autoregressive-distributed lag approach

2020 ◽  
Vol 3 (2) ◽  
pp. 26-49
Author(s):  
Sisay Demissew Beyene ◽  
Balázs Kotosz
Keyword(s):  
Government Spending ◽  
Budget Deficit ◽  
Government Debt ◽  
Annual Data ◽  
Ricardian Equivalence ◽  
Consumption Expenditure ◽  
Government Consumption ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
The Government

The Ricardian equivalence hypothesis (REH) suggests that when the government attempts to stimulate the economy by raising debt-financed government spending, consumption and demand do not increase but rather remain the same. The objective of this study is to test the existence of the REH in Ethiopia, using annual data from 1990 to 2011 and by employing the autoregressive-distributed lag cointegration approach. The study includes three variables (budget deficit, government consumption expenditure, and government debt) which contribute to the REH along with another variable. The results show that only the budget deficit and government consumption expenditure fulfil the REH. However, government debt fails to fulfil it. Thus, limited evidence of the existence of the REH is found in Ethiopia.

scholarly journals Asymmetric Consumption Smoothing

2021 ◽  
Vol 111 (1) ◽  
pp. 192-230
Author(s):  
Brian Baugh ◽  
Itzhak Ben-David ◽  
Hoonsuk Park ◽  
Jonathan A. Parker
Keyword(s):  
Life Cycle ◽  
Credit Card ◽  
Liquidity Constraints ◽  
Mental Accounting ◽  
Consumption Smoothing ◽  
Credit Card Debt ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Level Data ◽  
Tax Refunds

Analyzing account-level data from an account aggregator, we find that households increase consumption when they receive expected tax refunds, as if they face liquidity constraints. However, these same households smooth consumption when making payments in other years, primarily by transferring funds among liquid accounts. Even households carrying credit card debt smooth consumption when making payments, and even highly liquid households spend out of refunds. This behavior is inconsistent with pure liquidity constraints or hand-to-mouth behavior and is most consistent with a mental accounting life-cycle model. (JEL D12, E21, G51, H24, H31)

Liquidity Constraints

2017 ◽  
Author(s):  
Tullio Jappelli ◽  
Luigi Pistaferri
Keyword(s):  
Life Cycle ◽  
Intertemporal Choice ◽  
Liquidity Constraints ◽  
Credit Market ◽  
Budget Constraint ◽  
Consumption Growth ◽  
Credit Market Frictions ◽  
Equivalence Model ◽  
Over Time ◽  
Consumption Profile

The theory of intertemporal choice that we have developed so far assumes that there are no imperfections in the credit market. The ability to borrow and save as much as needed—imposing only the intertemporal budget constraint—allows the transfer of resources over time and thus maintenance of a stable consumption profile through the life cycle. The chapter studies how the consumer’s problem changes in the presence of credit market frictions. The latter may explain why consumption growth is sensitive to expected changes in income (excess sensitivity of consumption) and why it is greater than predicted by the certainty equivalence model (excess growth of consumption).

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