Testing of the Ricardian Equivalence proposition: An Empirical Examination for Malaysia (1962-2006)
| Main Authors: | Ismail, Ismadi, Ismail, Abdul Ghafar, Amiruddin, Rosilawati |
|---|---|
| Format: | Article info application/pdf eJournal |
| Bahasa: | eng |
| Terbitan: |
Master of Management, Faculty of Economics and Business, Universitas Gadjah Mada
, 2008
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| Subjects: | |
| Online Access: |
https://jurnal.ugm.ac.id/gamaijb/article/view/5571 https://jurnal.ugm.ac.id/gamaijb/article/view/5571/4542 |
Daftar Isi:
- This paper investigates the effects of debts and budgetary deficit on real variables using structural Vector Error Correction Model (VECM) method with long-run restrictions. We compare our estimates of the impulse responses with those based on levels Vector Auto-Regressive (VAR) with standard recursive order restrictions. The test is conducted on the Malaysian data covering the period of 1962-2006. The empirical results do not support the existence of “Ricardian Equivalence” hypothesis. The effects of budgetary deficit and government spending have a significant influence on private consumption and private investment.