Fiscal policy and the Ricardian equivalence: Empirical evidence from Morocco

Mouna MARZOUK, Youssef OUKHALLOU

Abstract


Abstract. This paper empirically investigates the validity of the Ricardian equivalence hypothesis in Morocco, based on recent data (1980-2016) that encompasses interesting episodes of demand-oriented expansionary government policy during the second half of the 2000s, followed by significant restrictive fiscal measures starting from 2012. We use the SVAR methodology, which enables us to make the difference between the dynamics of savings and the budget deficit by separating them into two types of shocks. Our results suggest that the equivalence is verified in the Moroccan macroeconomic framework. The paper concludes that national savings offset up to 76% of fiscal deficit shocks.

Keywords. Fiscal deficit, National savings, Ricardian equivalence, SVAR model.

JEL. H31, E21, E62.

Keywords


Fiscal deficit; National savings; Ricardian equivalence; SVAR model.

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References


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DOI: http://dx.doi.org/10.1453/jel.v4i3.1397

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