노령화와 국채 누적이 리카도 동등성 가설에 미치는 영향

How Do Aging and Government Debt Level Affect the Ricardian Equivalence Hypothesis?

The ability of expansionary fiscal policy to boost aggregated demand depends on how private agents react. Under the Ricardian equivalence hypothesis, fiscal policy would not be able to change aggregate demand due to private sector’s offset behavior against changes in public saving. This study aims to analyze how population aging and government debt level affect the empirical validity of the Ricardian equivalence hypothesis across 5-country panel data including Korea and Japan. By using Autoregressive Distributed Lag (ARDL)-bound test, the two variables show statistically significant impact on reinforcing the Ricardian equivalence hypothesis most particularly when government debt level is in excess of a threshold level of 76% of GDP. Accordingly, fiscal expansion measures would not be as effective in this scenario. The empirical analysis also reveals that the speed of the aging variable has a positive and significant effect on private saving. A widening income disparity among the aging population, as it is the case in Korea, would only push the aging population to restrain more from consumption in favor of saving as a measure of protection from future uncertainty, hence, reducing the aggregate demand further.