TY  - JOUR
AU  - Barro,Robert J.
TI  - The Ricardian Approach to Budget Deficits
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2685
PY  - 1989
Y2  - July 1989
UR  - http://www.nber.org/papers/w2685
L1  - http://www.nber.org/papers/w2685.pdf
N1  - Author contact info:
Robert J. Barro
Department of Economics
Littauer Center 218
Harvard University
Cambridge, MA 02138
Tel: 617/495-3203
Fax: 617/496-8629
E-Mail: rbarro@harvard.edu
AB  - 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.
ER  -