International Journal of Business and Management
An Empirical Test on the Validity of China’s Fiscal Policy ——Based on the Ricardian Equivalence Proposition
Abstract
The Ricardian Equivalence Proposition is the essential proposition relevant to fiscal policy, which arouses
general discussions on the research of macroeconomic policies. Its establishment is rather difficult in reality as it
requires comparatively strict hypothesis. All the empirical studies on the Ricardian Equivalence Proposition have
not come into agreement so far. The purpose of this paper is to analyze the dynamic effect of China’s fiscal
policy by utilizing impulse response function on the basis of establishing SVAR model which contains China’s
fiscal variables. Consequently we make an empirical conclusion that the Ricardian Equivalence Proposition is
untenable on China’s economy.
general discussions on the research of macroeconomic policies. Its establishment is rather difficult in reality as it
requires comparatively strict hypothesis. All the empirical studies on the Ricardian Equivalence Proposition have
not come into agreement so far. The purpose of this paper is to analyze the dynamic effect of China’s fiscal
policy by utilizing impulse response function on the basis of establishing SVAR model which contains China’s
fiscal variables. Consequently we make an empirical conclusion that the Ricardian Equivalence Proposition is
untenable on China’s economy.
This work is licensed under a Creative Commons Attribution 3.0 License.
International Journal of Business and Management ISSN 1833-3850 (Print) ISSN 1833-8119 (Online)
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