RICARDIAN EQUIVALENCE, BUDGET DEFICITS, AND SAVING IN THE UNITED-STATES, 1955 1-1991/4/

The Ricardian equivalent theory is examined by dichotemizing the total US federal budget deficit into its structural (exogeneous) and cyclic al (endogeneous) components. The former is hypothesized to be the expe cted, planned deficit, whereas the latter is viewed as the unpredictab le, unplanned, unexpected deficit. Instrumental variables estimates fo r the periods 1955-1991 and 1973-1991 find that structural deficits el icit increased saving but cyclical deficits do not. Thus, the findings indicate support for a partially Ricardian equivalent world: saving o nly partially offsets budget deficits.