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| Author: | Graham, F. |
| Title: | Government debt, government spending, and private-sector behavior: comment |
| Journal: | American Economic Review
1995 : DEC, VOL. 85:5, p. 1348-1357 |
| Index terms: | GOVERNMENT DEBT PRIVATE SECTOR |
| Language: | eng |
| Abstract: | In a much cited paper, Roger C.Kormendi (1983) argues for a consolidated approach to examining consumer behaviour. This approach incorporates the implications of Ricardian equivalence, as well as the possibility that government purchases of goods and services substitute for private consumption. The present article shows that Kormendi's evidence supporting a Ricardian view of consumer behaviour is less than convincing for at least two reasons. Excluding state and local fiscal variables from the consumption function produces even stronger non-Ricardian results. |
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