Government debt, Consumption, and Interest Rates: An Empirical Study of the Ricardian Equivalence Hypothesis
Date
Authors
Major Professor
Advisor
Committee Member
Journal Title
Journal ISSN
Volume Title
Publisher
Authors
Research Projects
Organizational Units
The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).
History
The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.
Dates of Existence
1898–present
Historical Names
- Department of Economic Science (1898–1910)
- Department of Economics and Political Science (1910-1913)
- Department of Applied Economics and Social Science (1913–1924)
- Department of Economics, History and Sociology (1924–1931)
- Department of Economics and Sociology (1931–1967)
Related Units
- College of Agricultural and Life Sciences (parent college)
- College of Liberal Arts and Sciences (parent college)
- College of Business (parent college)
Journal Issue
Is Version Of
Versions
Series
Department
Abstract
This paper investigates the effects of the government debt on private consumption and interest rates (i.e., the Ricardian equivalence hypothesis) in a nonlinear-quadratic equilibrium framework, combined with a time series analysis of the data. The model is summarized by the restrictions on the coefficients of a vector auto regressive (VAR) representation of the relevant variables. The model is not rejected for the sample period of 1947 through 1979 even though the evidence was not overwhelming. It is rejected when the sample period is. extended, to... include, the. Reagan .administration .period up to 1987,1. A more detailed data analysis based on a VAR implies, however',- that the rejection of the model does not necessarily imply rejection of the equivalence hypothesis for recent years and that the Ricardian equivalence hypothesis still provides a plausible approximation of reality.