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Title: Testing for Ricardian equivalence for the Maltese economy
Authors: Sammut, David (2006)
Keywords: Debts, Public -- Malta
Consumption (Economics) -- Malta -- Mathematical models
Malta -- Economic conditions
Fiscal policy -- Malta
Issue Date: 2006
Citation: Sammut, D. (2006). Testing for Ricardian equivalence for the Maltese economy (Master’s dissertation).
Abstract: This dissertation is intended to analyze the effects of government borrowing on consumption expenditure in Malta. The study uses data analysis and a survey to understand how the different economic variables related to this hypothesis have interacted and to see whether there is evidence for the assumptions of Ricardian equivalence. Households have saved enough throughout the last half of the 1980s and the first half of the 1990s to cover any future increases in government taxes that would result from government borrowing. This confirms debt irrelevance in the Ricardian sense as a long-term process. In the second half of the 1990s and the beginning of the decade starting from year 2000, evidence is less strong when savings data is utilized. This result seems to be highly dependent on whether the narrow definition of savings is used or the wider definition of wealth is used. In the latter case, there is more evidence for debt irrelevance. From the survey the majority of people confirmed that most, though not all, assumptions related to the hypothesis hold. Still, there are non-negligible segments of society that would consume more if the government cuts taxes. The assumptions seem to be stronger for people with children and those that have an expectation about their future parenthood. Finally, econometric analysis has also tended to favour the Ricardian equivalence hypothesis for the Maltese economy.
Description: M.A.ECONOMICS
Appears in Collections:Dissertations - FacEma - 1959-2008
Dissertations - FacEMAEco - 1971-2010

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