Working Paper: NBER ID: w0435
Authors: Martin Feldstein
Abstract: The evidence presented in this paper indicates that changes in government spending, transfers and taxes can have substantial effects on aggregate demand. The estimates also indicate that the promise of future social security benefits significantly reduces private saving. Each of the basic implications of the so-called "Ricardian equivalence theorem" is contradicted by the data. The results are consistent with the more general view of the effects of fiscal actions and fiscal expectations that is described in the paper.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Changes in government spending, transfers, and taxes (H59) | Aggregate demand (E00) |
| Promise of future social security benefits (H55) | Private saving (D14) |
| Government spending (H59) | Consumer expectations about future taxes (H31) |
| Consumer expectations about future taxes (H31) | Current consumption (E21) |
| Changes in government deficits (H69) | Aggregate demand (E00) |
| Government spending (H59) | Private saving (D14) |