CONSUMPTION, WEALTH, AND FINITE HORIZONS: TESTS OF RICARDIAN EQUIVALENCE

We find strongly non-Ricardian results when we re-estimate Evans's 1988] model using a better approximation of the market value of wealth. We also examine the long-run properties of the data and find results consistent with our regression evidence when we allow for declining labor income as modeled by Gali (1990]. Our findings in support of non-Ricardian behavior by consumers stand in sharp contrast to those of both Evans and Gali.