Hypothesis on the equivalence of tax vs. debt financing
The Ricardian equivalence proposition (also known as the Ricardo–de Viti–Barro equivalence theorem[1]) is an economic hypothesis holding that consumers are forward-looking and so internalize the government's budget constraint when making their consumption decisions. This leads to the result that, for a given pattern of government spending, the method of financing such spending does not affect agents' consumption decisions, and thus, it does not change aggregate demand.
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The Ricardianequivalence proposition (also known as the Ricardo–de Viti–Barro equivalence theorem) is an economic hypothesis holding that consumers are...
who want to change it. Another idea associated with Ricardo is Ricardianequivalence, an argument suggesting that in some circumstances a government's...
loans, and many fewer automobiles, telephones, and houses. The Ricardianequivalence hypothesis, named after the English political economist and Member...
risk premium Economic equivalence, a concept in engineering economics Ricardianequivalence, or Ricardo–de Viti–Barro equivalence, a proposition in economics...
future. An alternative view of government debt, sometimes called the Ricardianequivalence proposition, is that government debt has no impact on the economy...
among the most cited in macroeconomics. Its implications of his Ricardianequivalence are still being debated. Barro collaborated with Herschel Grossman...
Equivalence theorem may refer to: Economics Ricardianequivalence, a principle in economics Revenue equivalence, a concept in auction theory Mathematics...
depressed. Sceptics of fiscal policy also make the argument of Ricardianequivalence. They argue that an increase in debt will have to be paid for with...
amount and then have ongoing access to that amount. Ricardian economics RicardianequivalenceRicardian socialism rights right to work law A state law forbidding...
expectations) Irrelevance of taxes and budget deficits to consumption (Ricardianequivalence) Keynesian economics has faced criticism from other schools of thought...
opposite. Income effect Income elasticity of demand Money illusion Ricardianequivalence Wealth (economics) Wealth elasticity of demand • Darby, Michael...
and Thomas Schelling.[citation needed] (See also Time horizon, Ricardianequivalence.) Yew-Kwang Ng – He uses the term in 1986 to describe a hybrid of...
interacts strongly with fiscal policy, because of the failure of RicardianEquivalence due to the presence of hand-to-mouth households. In particular,...
that prices would fall further. Robert Barro argued that due to Ricardianequivalence in the presence of a bequest motive, the public is not fooled into...
No. 6 (1974), pp. 1095–1117. JSTOR 1830663 ... re-introduced the Ricardianequivalence to macroeconomics, pointing out flaws in Keynesian theory. "Rules...
irrelevant proposition.[citation needed] In 1974, Robert Barro revived "RicardianEquivalence" by showing in a simple, elegant framework that each generation's...
save in anticipation of taxes to repay the borrowing is known as RicardianEquivalence, and is sometimes cited as a rationale for believing that fiscal...
Efficient-market hypothesis Rational expectations Real business cycle theory Ricardianequivalence Saltwater theories New Keynesian economics Neoclassical synthesis...
private actors' uncertainty and lower the risk premium. Assuming that Ricardianequivalence and the permanent income hypothesis hold, actors' expected future...
spending behavior reacts strongly to changes in disposable income. As Ricardianequivalence fails in HANK models, the reaction of the fiscal authority to a...
assumptions are similar to the assumptions made in the so-called Ricardianequivalence, whereby consumers are assumed to be forward looking and to internalize...
with other areas of economic theory, such as monetary economics or Ricardianequivalence and its relation to optimal growth. His position at Cowles gave...
spending behavior reacts strongly to changes in disposable income. As Ricardianequivalence fails in HANK models, the reaction of the fiscal authority to a...
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