Word.ws English Dictionary

Ricardian equivalence

Ricardian equivalence noun: the idea that consumers are forward-looking and so internalize the government's budget constraint when making their consumption decisions, so that, for a given pattern of government spending, the method of financing such spending does not affect agents' consumption decisions, and thus does not change aggregate demand.

Noun

Ricardian equivalence (uncountable)

  1. The idea that consumers are forward-looking and so internalize the government's budget constraint when making their consumption decisions, so that, for a given pattern of government spending, the method of financing such spending does not affect agents' consumption decisions, and thus does not change aggregate demand.

Origin of Ricardian equivalence

Proposed by economist David Ricardo in the early 19th century.

Questions about Ricardian equivalence

What does Ricardian equivalence mean?
Ricardian equivalence means the idea that consumers are forward-looking and so internalize the government's budget constraint when making their consumption decisions, so that, for a given pattern of government spending, the method of financing such spending does not affect agents' consumption decisions, and thus does not change aggregate demand.
What part of speech is Ricardian equivalence?
Ricardian equivalence is a noun.

Words near Ricardian equivalence in the dictionary

  1. Rican
  2. ricaniid
  3. ricaniids
  4. Ricans
  5. Ricardian
  6. Ricardian equivalence
  7. Ricardianism
  8. Ricardians
  9. Ricardo
  10. Ricarte Norte
  11. Ricarte Sur

Source and license

Adapted from Wiktionary: Ricardian equivalence (page history and authors). Text available under the Creative Commons Attribution-ShareAlike 4.0 license. Word.ws reformatted the entry and added links. Wiktionary data of 2026-09-02.

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