Barro-Ricardo Equivalence, an Experimental Approach

The aim of this dissertation is to verify the validity of the Barro-Ricardian equivalence in the Czech context through a laboratory experiment and complementary analysis based on unique field data. The experimental panel data obtained from the laboratory experiment are analyzed using non-parametric methods and regression analysis based on the fixed effects (FE) method. For the complementary analysis involving field panel data, we utilize fixed effects (FE) and generalized method of moments (GMM). Our findings from both analyses confirm that taxation has a significant impact on consumption decisions, indicating that the Barro-Ricardian equivalence hypothesis does not hold. The results obtained from the laboratory experiment show that a tax reduction during the life cycle increases consumption by an average of 28.7% of the tax relief, while a tax increase causes a decrease in consumption by an average of 27.8% of the tax increase. Moreover, changes in tax levels affect consumption in subsequent periods. The results of the complementary analysis of quarterly panel data, which include field data from the period 2017–2023, reveal that personal income tax has a significant negative impact on consumption. Our integrative approach, combining laboratory and field data analysis, provides an original perspective on the issue of Ricardian equivalence in the Czech context and can serve as an empirical basis for the formulation of effective fiscal measures.