The (in)validity of the Ricardian equivalence theorem : findings from a representative German population survey

Bernd Hayo and Florian Neumeier

In this paper, we utilise data from a German population survey to test the validity of the Ricardian equivalence theorem (RET). In 2013, 2,000 representatively chosen people were asked whether they have altered their consumption and saving behaviour in response to the significant increase in public debt that occurred between 2008 and 2012. Our findings suggest that, in general, RET does not hold. Only 7% of our respondents state that they consume a smaller proportion of their income and save a larger proportion in response to public debt accumulation. Moreover, using multinominal logit regressions, we find that individuals' consumption responses are significantly related to their economic situation, time preferences, education, and age.

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Year of publication:	2016 ; This version: 29 February 2016
Authors:	Hayo, Bernd ; Neumeier, Florian
Publisher:	Marburg : Philipps-University Marburg, School of Business and Economics
Subject:	Ricardian equivalence \| public debt \| private consumption \| private saving \| survey \| Germany \| Deutschland \| Ricardianische Äquivalenz \| Öffentliche Schulden \| Public debt \| Sparen \| Savings \| Privater Konsum \| Private consumption \| Konsumtheorie \| Consumption theory