Politická ekonomie 2023, 71(4):366-389 | DOI: 10.18267/j.polek.1387

Experimentální ověření platnosti Barrovy-Ricardovy ekvivalence

Petr Frejlicha, Helena Chytilová ORCID...a, Vojtěch Kotrba ORCID...a, Pavel Kotrbab
a Vysoká škola ekonomická v Praze, Národohospodářská fakulta, Praha, Česká republika
b University of New York in Prague, Praha, Česká republika

Experimental Verification of Barro-Ricardo Equivalence Theorem

The aim of this study is to verify the validity of Barro-Ricardo equivalence in Czech conditions with the help of experimental methods. Ricardian equivalence, in which case consumers postpone consumption under lower taxation, is a basic assumption of many studies dealing with intertemporal decision making and has important implications for government tax policy. Using nonparametric methods and panel data regression, we find that Ricardian equivalence does not hold in general. Our results suggest that taxation has a significant impact on consumption decisions. Over the life cycle, a tax cut increases consumption on average by 28.7% of the tax credit. Conversely, a tax increase causes a 27.8% increase in consumption on average. Using individual consumption time series, we find that approximately 70% of the tested individuals behave contrary to Ricardian equivalence. Our results show that a change in tax levels affects consumption in subsequent periods.

Keywords: Ricardian equivalence, consumption, taxation, laboratory experiment, life cycle
JEL classification: A13, B13, C32, E24, J21, J64

Received: October 21, 2022; Revised: January 13, 2023; Accepted: January 24, 2023; Prepublished online: August 14, 2024; Published: September 6, 2023  Show citation

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Frejlich, P., Chytilová, H., Kotrba, V., & Kotrba, P. (2023). Experimental Verification of Barro-Ricardo Equivalence Theorem. Politická ekonomie, 71(4), 366-389. doi: 10.18267/j.polek.1387
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