Abstract
This article applies newly developed asymmetric impulse response functions and asymmetric variance decompositions to investigate the dynamic relationship between government spending and the GDP at constant prices in Sweden. The estimated results show that an innovation in the government spending does not lead to a significant response in the GDP regardless of whether or not the asymmetric property is taken into account in the estimation of the impulses. The asymmetric variance decompositions also provide support for this conclusion. This might support the view that the Ricardo equivalence theorem is valid in the case of Sweden.
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