Please use this identifier to cite or link to this item: http://hdl.handle.net/10603/384319
Title: Deficit Financing and Ricardian Equivalence A Study of Indian Economy
Researcher: Mehta Dhyani
Guide(s): Mallikarjun M
Keywords: Economics
Economics and Business
Social Sciences
University: Nirma University
Completed Date: 2021
Abstract: The theme of this thesis is Ricardian equivalence, and its objective is to examine the effects of deficit newlinefinancing on private consumption expenditures, interest rates, and current account balance. newlineAccording to the Ricardian equivalence proposition, the method of deficit financing will have no newlineimpact on the economy, subject to certain assumptions. Contradictory to the Ricardian proposition newlineis the Keynesian proposition, which says that the method of deficit financing does have an impact newlineon the economy. It is important to study the impact of debt versus tax mode of deficit financing on newlinemacroeconomic variables such as consumption, interest rate, and current account balance, because newlineif the effects of deficit financing are neutral (Ricardian view), then a stabilization program that is newlinebased on demand management policy to curtail fiscal deficits will not be operative. On the other newlinehand, if the effect of deficit financing is not neutral (Keynesian view) then deficit financing may newlineinduce private consumption, boost interest rates, crowd out investment, and retard economic growth. newlineMost governments alter fiscal policies to fight macroeconomic challenges and stimulate economic newlinegrowth. Due to an increase in government spending, budget deficits also increase. The Indian newlineeconomy has continuously faced budgetary deficits for decades; all the budgets presented in the newlineparliament have been deficit budgets. Given India s long history of running huge fiscal deficits, the newlinesharp increase in fiscal deficit over the last few years is a major concern for both, academicians and newlinepolicy makers in India. If the Ricardian equivalence holds true in the Indian economy, does newlinehouseholds alter its spending patterns and consequently increase their savings, resulting in making newlinethe policy changes ineffective. The study is an attempt to validate empirically the Ricardian newlineequivalence in the Indian context. It has been always argued that higher deficits may adversely affect newlinet
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URI: http://hdl.handle.net/10603/384319
Appears in Departments:Institute of Management

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11 chapter 4.pdfAttached File880.19 kBAdobe PDFView/Open
12 chapter 5.pdf724.61 kBAdobe PDFView/Open
13 chapter 6.pdf323.22 kBAdobe PDFView/Open
15 appendix a.pdf441.4 kBAdobe PDFView/Open
16 appendix b.pdf229.72 kBAdobe PDFView/Open
1 title page.pdf204.33 kBAdobe PDFView/Open
3 certificate.pdf288.25 kBAdobe PDFView/Open
4 declaration.pdf351.92 kBAdobe PDFView/Open
5 abstract.pdf131.78 kBAdobe PDFView/Open
6 acknowledgement.pdf125.68 kBAdobe PDFView/Open
7 table of content.pdf406.95 kBAdobe PDFView/Open
80_recommendation.pdf487.94 kBAdobe PDFView/Open
9 chapter 2.pdf687.37 kBAdobe PDFView/Open
chapter 1.pdf555.93 kBAdobe PDFView/Open
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