NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Ricardian Approach to Budget Deficits

Robert J. Barro

NBER Working Paper No. 2685 (Also Reprint No. r1220)
Issued in August 1988
NBER Program(s):   EFG

Persistent budget deficits have increased economists' interest in theories and evidence about fiscal policy. This paper develops the Ricardian approach and contrasts it with standard models. The discussion considers from major theoretical objections to Ricardian equivalence-finite lifetimes, imperfect capital markets, uncertainty about future taxes and incomes, and the distorting effects of taxation Then the paper considers empirical evidence on interest rates, consumption and saving, and current-account deficits. The conclusion is that the Ricardian approach is a useful first-order approximation, and that this approach will probably become the benchwork model for assessing fiscal policy.

download in pdf format
   (652 K)

email paper

This paper is available as PDF (652 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w2685

Published: Journal of Economic Perspectives, Vol. 3, No. 2, pp. 37-54, (Spring 1989). citation courtesy of

Users who downloaded this paper also downloaded these:
Elmendorf and Mankiw w6470 Government Debt
Barro w5502 Reflections on Ricardian Equivalence
Alesina and Tabellini w2759 Voting on the Budget Deficit
Alesina and Perotti w4637 The Political Economy of Budget Deficits
Roubini and Sachs w2919 Government Spending and Budget Deficits in the Industrial Economies
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us