| Ricardian Equivalence Hypothesis in the Sub-Sahara African Countries |
Robert Becker Pickson, Grace Ofori-Abebrese |
College of Economics and Management, Sichuan Agricultural University, Chengdu, China
Department of Economics, Kwame Nkrumah University of Science and Technology,Kumasi, Ghana |
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Corresponding Author:
Robert Becker Pickson ,Email: myselfpickson@yahoo.com |
| Copyright ©2018 Journal of Economic Integration |
| ABSTRACT |
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The validity of the Ricardian equivalence proposition remains disputed in spite of the numerous empirical work. This study utilized panel ARDL estimation approach to investigate the evidence of Ricardian Equivalence Hypothesis in five Sub-Sahara African countries, namely Botswana, Ghana, Gambia, Nigeria, and Kenya over the period of 1981~2014. Our results show that GDP per capita and interest rate have significant positive impacts on private consumption, whereas government debt, government spending, government interest payment on the outstanding debt have negative impacts on private consumption. Ricardian equivalence hypothesis, which states that private consumption remains unchanged regardless of government’s spending, does not hold in Sub-Sahara African countries.
JEL Classification
E4: Money and Interest Rates
E21: Consumption; Saving; Wealth
E31: Price Level; Inflation; Deflation
H5: National Government Expenditures and Related Policies
H6: National Budget, Deficit, and Debt
H63: Debt; Debt Management; Sovereign Debt |
| Keywords:
Ricardian equivalence | Interest rate | Government debt | Government spending | Government debt interest payments | Inflation
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