New Wine in Old Bottles: A Meta-Analysis of Ricardian Equivalence

A quantitative review, or meta-analysis, of 28 empirical studies of the Ricardian equivalence theorem (RET) gives persuasive testament of its falsity. Although there is great dissonance concerning the validity of Ricardian equivalence among contributors and reviewers alike, my meta-analysis reveals that the testing record, as a whole, entails a strong empirical rejection of RET. This conclusion is further strengthened by the fact that both a study's degrees of freedom and its proper econometric specification increase the likelihood of rejection. A meta-regression analysis identifies nine study characteristics that help explain the large study-to-study variation found among reported RET test results (R² = 83%).