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Ricardian equivalence tells us that the timing of taxes c matter. What 1; matter is the present value of government expenditures. If the government cuts
Ricardian equivalence tells us that the timing of taxes c matter. What 1; matter is the present value of government expenditures. If the government cuts taxes today, without changing the expenditures, the consumers lifetime wealth 0 change, because the government will have to balance the budget changing taxes tomorrow. In short, a government deficit (or surplus) today 0 matter for economic activity (if expenditures are untouched)
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