This paper characterizes empirically how government budget variables, such as spending, taxes, and deficits, affected private-sector consumption in the high-budget-deficit economy of Israel during the first half of the 1980s. The paper develops and estimates an intertemporal optimizing model of...

Ricardian Equivalence states that, under certain circumstances and for a given path of expenditures, the substitution of debt for taxes does not affect private sector wealth and consumption. Ricardian Equivalence is based on the premise that debt financing is only a change in the timing of...

This paper characterizes empirically how government budget variables, such as spending, taxes, and deficits, affected private-sector consumption in the high-budget-deficit economy of Israel during the first half of the 1980s. The paper develops and estimates an intertemporal optimizing model of...