Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212170 
Year of Publication: 
2010
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 13/2010
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This paper shows that the Ricardian Equivalence proposition can continue to hold when expectations are not rational and are instead formed using adaptive learning rules. In temporary equilibrium, with given expectations, Ricardian Equivalence holds under the standard conditions for its validity under rational expectations. Furthermore, Ricardian Equivalence holds for paths of temporary equilibria under learning provided suitable additional conditions on learning dynamics are satisfied. New cases of failure of the Ricardian proposition emerge under learning. Most importantly, agents expectations must not depend on government financial variables under deficit financing.
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-603-3
Document Type: 
Working Paper

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