Ricardians in the European Union: The Role of Fiscal Rules
Year: 2021 Volume: 71 Issue: 3 Pages: 245-266
Abstract: The presented paper deals with the concept of Ricardian equivalence in the European Union. The debt crisis has drawn the attention of professionals and the general public to the sustainability of public finance. The growing government debts of countries also affect the consumer behavior of households. The main objective of the paper is to determine the role of government debt and compliance with fiscal rules on household consumer behavior in the European Union and the Eurozone. The results of the empirical study confirmed the validity of the Ricardian equivalence in the European union during the time period 1995-2020, where the year-on-year change in the amount of government debt and the distance from compliance with fiscal rules dampens the growth of household expenditures.
JEL classification: E62, H31, H63
Keywords: Ricardian equivalence, fiscal rules, government debt, household expenditure
DOI: https://doi.org/10.32065/CJEF.2021.03.03
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