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New Wine in Old Bottles: A Meta‐Analysis of Ricardian Equivalence
Author(s) -
Stanley T. D.
Publication year - 1998
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.1998.tb00089.x
Subject(s) - ricardian equivalence , falsity , cognitive dissonance , econometrics , equivalence (formal languages) , meta analysis , economics , positive economics , empirical research , mathematical economics , statistics , mathematics , psychology , epistemology , philosophy , social psychology , keynesian economics , medicine , discrete mathematics , fiscal policy
A quantitative review, or meta‐analysis, of 28 empirical studies of the Ricardian equivalence theorem (RET) gives persuasive testament of its falsity. Although there is great dissonance concerning the validity of Ricardian equivalence among contributors and reviewers alike, my meta‐analysis reveals that the testing record, as a whole, entails a strong empirical rejection of RET. This conclusion is further strengthened by the fact that both a study's degrees of freedom and its proper econometric specification increase the likelihood of rejection. A meta‐regression analysis identifies nine study characteristics that help explain the large study‐to‐study variation found among reported RET test results ( R 2 = 83%).