TY  - JOUR
AU  - Leiderman,Leonardo
AU  - Razin,Assaf
TI  - Testing Ricardian Neutrality with an Intertemporal Stochastic Model
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2258
PY  - 1989
Y2  - February 1989
UR  - http://www.nber.org/papers/w2258
L1  - http://www.nber.org/papers/w2258.pdf
N1  - Author contact info:
Leonardo Leiderman
Department of Economics
Tel-Aviv University
Ramat Aviv  69978
ISRAEL
E-Mail: leoleid@post.tau.ac.il

Assaf Razin
Department of Economics
Cornell University
Uris 422
Ithaca, NY 14853
Tel: 607/255-9625
Fax: 607/255-2818
E-Mail: ar256@cornell.edu
AB  - The purpose of this paper is to develop and estimate a stochastic-intertemporal model of consumption behavior and to use it for testing a version of the Ricardian-equivalence proposition with time series data. Two channels that may give rise to deviations from this proposition are specified: Finite horizons and liquidity constraints. In addition, the model incorporates explicitly the roles of taxes, substitution between public , and private consumption, and different degrees of consumer goods' durability. The evidence, based on data for Israel in the first half of the 1980s, supports the Ricardian neutrality specification, yielding plausible estimates for the behavioral parameters of the aggregate consumption function.
ER  -