Politická ekonomie 2003, 51(4):517-532 | DOI: 10.18267/j.polek.414

Spotřební funkce a princip Ricardovské ekvivalence v malé otevřené ekonomice

Martin Mandel, Vladimír Tomšík
1 Vysoká škola ekonomická, Praha.
2 NEWTON Holding, a.s., Praha.

The consumption function and Ricardian equivalence in a small open economy

The paper provides a comprehensive survey of the theories of consumption functions. The Keynesian consumption function is examined in more detail under a condition of a small open economy. The paper explains the variety of consumption expenditures in the Czech Republic between 1993 - 2001. In this paper an enlarged version of the Czech consumption function, also tests Ricardian equivalence. Empirical results imply that consumer behaviour reacts rationally to an external imbalance and the economy heads to equilibrium by itself. However, the consumption reaction seems to be irrational under an internal balance. Consumers do not voluntarily reduce their consumption when deficit of public finance appears but they are forced to do so when interest rates increase as a result of the internal imbalance.

Keywords: monetary policy, convergence, fiscal policy, consumption, Ricardian equivalence, terms of trades, balance of income
JEL classification: E21, F15, F32, F43

Published: August 1, 2003  Show citation

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Mandel, M., & Tomšík, V. (2003). The consumption function and Ricardian equivalence in a small open economy. Politická ekonomie51(4), 517-532. doi: 10.18267/j.polek.414
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