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AN ANALYSIS OF STABILITY IN A KEYNESIAN ECONOMY WITH RICARDIAN CONSUMERS

Benjamin Russo (University of North Carolina at Charlotte.)

Studies in Economics and Finance

ISSN: 1086-7376

Article publication date: 1 January 1991

Abstract

Ricardian behavior may increase the variance of consumption: A change in national income will change future tax liabilities endogenously; if consumers are Ricardian, consumption will change for this reason. This paper studies the effects of these changes on the stability of an economy with sticky prices. The analysis indicates that Ricardian tax discounting would tend to reduce macroeconomic stability.

Citation

Russo, B. (1991), "AN ANALYSIS OF STABILITY IN A KEYNESIAN ECONOMY WITH RICARDIAN CONSUMERS", Studies in Economics and Finance, Vol. 14 No. 1, pp. 49-69. https://doi.org/10.1108/eb028699

Publisher

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MCB UP Ltd

Copyright © 1991, MCB UP Limited