Econometric test of ricardian equivalence hypothesis: results for nigeria

The paper examines the validity of the Ricardian Equivalence Hypothesis using Nigeria data from period 1980 – 2010. The data used in the model were stationary at level except wealth variable that is stationary at first difference. The estimated model shows that income and wealth have the theoretically expected positive value. The other variables were positive and significant contrary to the proposition that they be either zero or negative for the pure Ricardian Hypothesis to hold. The implication of the findings shows that Nigerians will respond positively to change in government policy such as a change in debt interest rate and fiscal deficit. It also means that Nigerians are not neutral to changes in government policy. Government can therefore use fiscal policy to change the aggregate demand of the citizens.