Endogenously (Non-)Ricardian Beliefs

August 31, 2026Open Access

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Key Points

To examine how economic agents endogenously formulate Ricardian versus non-Ricardian beliefs regarding government debt and to analyze how these shifting expectations impact monetary and fiscal policy transmission.
Constructed a dynamic macroeconomic model incorporating endogenous belief formation regarding government budget constraints and tax expectations.
Provided numerical simulations and open-source replication routines to evaluate macroeconomic equilibrium under alternating policy regimes.
Demonstrated that beliefs regarding whether public debt is backed by future taxes evolve endogenously rather than remaining exogenously fixed.
Showed that regime shifts between Ricardian and non-Ricardian expectations significantly alter price-level determination and aggregate demand responses to fiscal shocks.

Replication files for "Endogenously (Non-)Ricardian Beliefs", forthcoming in the International Economic Review

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Branch et al. (2026) studied this question.

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