Adapted from Escher here. Ricardian equivalence is the idea that tax cuts finaced by extra government borrowing don't affect spending because people save the extra income to pay for the future taxes that will be needed to service the extra government debt. See this article in Wikipedia.Friday 27 February 2009
Ricardian Equivalence
Adapted from Escher here. Ricardian equivalence is the idea that tax cuts finaced by extra government borrowing don't affect spending because people save the extra income to pay for the future taxes that will be needed to service the extra government debt. See this article in Wikipedia.
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