An investigation of Ricardian equivalence in a common trends model
Article Abstract:
A common trends framework such as a VAR model with cointegrating constraints was applied to empirically differentiate between Ricardian and non-Ricardian behaviour. The VAR method is different in that it is able to differentiate between unexpected and expected, in addition to transitory and constant fluctuations in in government consumption and taxes. Results from a study of US data indicates some credence in the Ricardian hypothesis, though minor distinctions exist in its projections.
Publication Name: Journal of Monetary Economics
Subject: Economics
ISSN: 0304-3932
Year: 1997
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Asset pricing in production economies
Article Abstract:
A real business cycle model was utilized to analyze asset returns in production economies. The model, which duplicates basic business cycle facts, produced historical equity premium that combines capital adjustment costs and habit formation. The business cycle framework also identified simple habit formation preferences as a contributory factor to the existence of high equity premia.
Publication Name: Journal of Monetary Economics
Subject: Economics
ISSN: 0304-3932
Year: 1998
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